Baker is single and earned $227,000 of salary as an employee in 2020. How much should his employer have withheld from his paycheck for FICA taxes? (Round your answer to the nearest whole dollar amount.)

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Quizplus · Accepted Answer

FICA taxes consist of Social Security and Medicare taxes. For 2020, the Social Security tax rate was 6.2% on earnings up to $137,700, and the Medicare tax rate was 1.45% on all earnings, with an additional 0.9% Medicare surtax on earnings over $200,000 for single filers. Baker's Social Security tax would be 6.2% of $137,700 (the maximum earnings subject to Social Security tax), which equals $8,537.40. His Medicare tax would be 1.45% of $227,000, which equals $3,291.50. Since Baker earned more than $200,000, he is also subject to the additional 0.9% Medicare surtax on the amount over $200,000, which is $27,000 in his case. The surtax would be 0.9% of $27,000, which equals $243. Therefore, the total FICA tax would be $8,537.40 (Social Security) + $3,291.50 (Medicare) + $243 (additional Medicare surtax) = $12,071.90, which rounds to $12,072.

Baker Is Single and Earned $227,000 of Salary as an Employee