Asked by preet malhotra on May 21, 2024
Verified
In 2016,the maximum taxable income for Social Security was $118,500,and the rate was 6.2%.The rate for Medicare tax was 1.45%.If Jessica's taxable income as an attorney was $152,000 that year,how much did she pay in FICA taxes?
A) $2,204
B) $9,551
C) $9,424
D) $11,628
Taxable Income
Earnings that are taxable.
Medicare Tax
The amount of Medicare tax an employee pays is a set percentage of the entire income with no maximum amounts; the amount paid is split between the employee and employer.
FICA Taxes
Taxes funded by both employers and employees to finance Social Security and Medicare benefits, based on earned income.
- Grasp the principles of Social Security, including the determination of benefits and taxation.
Verified Answer
VK
Varghese KuriakoseMay 26, 2024
Final Answer :
B
Explanation :
Jessica's FICA taxes would include both Social Security and Medicare taxes. For Social Security, she would pay 6.2% on the maximum taxable income of $118,500, not on her entire income since it exceeds the cap. For Medicare, there is no income cap, so she would pay 1.45% on her entire income of $152,000. Calculating both: Social Security tax = $118,500 * 6.2% = $7,347. Medicare tax = $152,000 * 1.45% = $2,204. Adding both gives $7,347 + $2,204 = $9,551.
Learning Objectives
- Grasp the principles of Social Security, including the determination of benefits and taxation.