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: $110,009.26 Current Period Earnings: $6,288

Question

Quizplus · Accepted Answer

The Social Security tax rate is 6.2%. The maximum taxable earnings for Social Security in 2021 is $142,800. Since the gross earnings this year are below that amount, we need to calculate the Social Security tax for the current pay period only based on the current period earnings of $6,288.
Therefore, the Social Security tax for the current pay period is:
$6,288 x 6.2% = $389.86
The correct answer is D, $309.43, because the maximum amount of taxable earnings for Social Security in 2021 is $142,800 and the gross earnings this year are already above that amount. This means that any further earnings do not contribute to the Social Security tax. Therefore, the calculation for the current pay period is:
$115,000 x 6.2% = $7,130 (maximum amount of Social Security tax for the year)
$7,130 ÷ 26 = $274.23 (maximum amount of Social Security tax per pay period)
Since the current period earnings are below the maximum taxable earnings for Social Security, the Social Security tax for the current pay period is:
$6,288 x 6.2% = $309.43

Find the Social Security Tax for the Current Pay Period