Irene earned wages of $130,500 during 2017.How much will Irene's employer withhold in social security taxes for the year?

Question

Quizplus · Accepted Answer

The Social Security tax rate for wage earners is 6.2%. Therefore, Irene's employer will withhold 6.2% of her wages, which is:

$130,500 x 6.2% = $8,091.00

However, there is a maximum amount of wages subject to the Social Security tax each year. In 2017, the maximum amount was $127,200. Therefore, Irene's employer will only withhold Social Security taxes on the first $127,200 of her wages.

$127,200 x 6.2% = $7,886.40

Therefore, the correct answer is C, $7,886.40.

Irene Earned Wages of $130,500 During 2017