Davis and Thompson have earnings of $850 each. The social security tax rate is 6.0%, and the Medicare tax rate is 1.5%. Assuming that the payroll will be paid on December 29, what will be the employer's total FICA tax for this payroll period?
A) $102.00
B) $127.50
C) $96.00
D) $25.50

Question

Quizplus · Accepted Answer

To find the employer's total FICA tax, we need to calculate the social security tax and the Medicare tax separately for both employees, and then add them up.

For each employee:

Social security tax = earnings x social security tax rate = $850 x 6% = $51
Medicare tax = earnings x Medicare tax rate = $850 x 1.5% = $12.75

For both employees:

Total social security tax = $51 + $51 = $102
Total Medicare tax = $12.75 + $12.75 = $25.50

Employer's total FICA tax = total social security tax + total Medicare tax = $102 + $25.50 = $127.50

Therefore, the best choice is B, $127.50.

Davis and Thompson Have Earnings of $850 Each