During 2018, Jones Corporation paid Joshua a salary of $100,000 and a bonus of $30,000. What is Jones Corporation's deduction (rounded to the nearest dollar) for its share of FICA taxes paid on Joshua's compensation for 2018?
A) $6,200
B) $7,961
C) $9,232
D) $9,846

Question

During 2018, Jones Corporation paid Joshua a salary of $100,000 and a bonus of $30,000. What is Jones Corporation's deduction (rounded to the nearest dollar) for its share of FICA taxes paid on Joshua's compensation for 2018?
A) $6,200 
B) $7,961 
C) $9,232 
D) $9,846

Quizplus · Accepted Answer

Jones Corporation's share of FICA taxes paid on Joshua's compensation for 2018 is equal to the total FICA taxes paid by both Joshua and Jones Corporation, which is calculated as follows: 
$100,000 Salary x 6.2% (Social Security tax rate) = $6,200 Social Security tax paid by Joshua
$130,000 Total compensation (salary + bonus) x 1.45% (Medicare tax rate) = $1,885 Medicare tax paid by Joshua 
Total FICA taxes paid by Joshua = $6,200 + $1,885 = $8,085
Jones Corporation's share of FICA taxes paid = Total FICA taxes paid by Joshua x 7.65% (total FICA tax rate for employer) 
= $8,085 x 7.65% = $618.53, rounded to $619 
Therefore, the deduction for Jones Corporation's share of FICA taxes paid on Joshua's compensation for 2018 is $619, which is closest to answer choice D ($9,846).

During 2018, Jones Corporation Paid Joshua a Salary of $100,000