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Business Mathematics Brief 12th Edition by Stanley Salzman ,Gary Clendenen, Charles Miller
Edition 12ISBN: 978-0132605540Business Mathematics Brief 12th Edition by Stanley Salzman ,Gary Clendenen, Charles Miller
Edition 12ISBN: 978-0132605540 Exercise 20
Describe the difference between the FICA paid by an employee and FICA paid by a self-employed person. (See Objective.)
OBJECTIVE Determine the FICA tax and the Medicare tax paid by a self-employed person. People who are self-employed pay higher Social Security tax and higher Medicare tax than people who work for others. There is no employer to match the employee contribution, so the self-employed person pays a rate that is double that of an employee. The gross earnings of the self-employed person are first multiplied by 92.35% (.9235) to find the adjusted earnings. These adjusted earnings are then multiplied by the current rates. In our examples, the self-employed person pays 12.4% of adjusted earnings for Social Security tax and 2.9% of adjusted earnings for Medicare tax.
OBJECTIVE Determine the FICA tax and the Medicare tax paid by a self-employed person. People who are self-employed pay higher Social Security tax and higher Medicare tax than people who work for others. There is no employer to match the employee contribution, so the self-employed person pays a rate that is double that of an employee. The gross earnings of the self-employed person are first multiplied by 92.35% (.9235) to find the adjusted earnings. These adjusted earnings are then multiplied by the current rates. In our examples, the self-employed person pays 12.4% of adjusted earnings for Social Security tax and 2.9% of adjusted earnings for Medicare tax.
Explanation
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When it comes down to it, the self-emplo...
Business Mathematics Brief 12th Edition by Stanley Salzman ,Gary Clendenen, Charles Miller
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