Kelly received a $60,000 salary during 2015. Her federal income tax withholding rate was 20%, and the Social Security base amount for 2015 was $118,500. What is the total amount that her employer should have withheld in 2015?

Question

Quizplus · Accepted Answer

First, we need to calculate Kelly's Social Security taxes. Social Security tax is calculated as 6.2% of the Social Security base amount ($118,500 in 2015), so Kelly's Social Security tax for 2015 would be:
$118,500 x 0.062 = $7,347
This is the maximum amount of Social Security taxes that Kelly would owe for the year.
Next, we need to calculate Kelly's federal income tax withholding. Her salary was $60,000, and her withholding rate was 20%, so her federal income tax withholding for the year would be:
$60,000 x 0.20 = $12,000
Finally, we add Kelly's Social Security tax and federal income tax withholding together to get the total amount that her employer should have withheld for the year:
$7,347 + $12,000 = $19,347
However, we need to remember that there is a cap on Social Security tax withholding. In 2015, the maximum amount of Social Security tax that could be withheld was $7,347. Since we already calculated that Kelly's Social Security tax would be $7,347, we know that her employer should not have withheld any more than that. Therefore, the total amount that her employer should have withheld for the year is:
$7,347 + $12,000 = $16,347
The closest option to this answer is A, which is $16,590.

Kelly Received a $60,000 Salary During 2015