Find the Social Security tax for the current pay period. Assume a 6.2% FICA rate up to a maximum of $115,000.
-Gross Earnings This Year: $113,089.05 Current Period Earnings: $4,442.38

Question

Quizplus · Accepted Answer

The Social Security tax is calculated by applying the 6.2% FICA rate to the current period earnings. However, there's a maximum earnings limit of $115,000 for the tax. The employee's gross earnings for the year before the current pay period are $113,089.05. Adding the current period earnings of $4,442.38 would exceed the maximum, but only the amount up to $115,000 is subject to the tax. The difference between $115,000 and $113,089.05 is $1,910.95, which is the amount subject to the 6.2% tax for this period. Therefore, the Social Security tax is 0.062 * $1,910.95 = $118.48.

Find the Social Security Tax for the Current Pay Period