To date, Jay Ward has cumulative earnings of $107,600. This week he is paid $3,000. The total amount of Social Security tax for this week is (assume a rate of 6.2% on $110,100 for Social Security and 1.45% for Medicare):

Question

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Jay Ward's cumulative earnings before this week are $107,600. Adding this week's $3,000 brings it to $110,600. However, Social Security tax only applies up to $110,100. Therefore, only $2,500 of this week's earnings are subject to the 6.2% Social Security tax, which equals $155.00.

To Date, Jay Ward Has Cumulative Earnings of $107,600