During 2016, Scott Howell received a salary of $125,000. The social security base amount for 2016 was $118,500. How much payroll tax should have been withheld from Scott's salary for 2016?

Question

Quizplus · Accepted Answer

Social Security tax is calculated at a rate of 6.2% on the first $118,500 of income. Therefore, the maximum Social Security tax for 2016 is 6.2% of $118,500, which is $7,347.
Scott's annual salary of $125,000 exceeds the Social Security base amount of $118,500. Therefore, he will have to pay 6.2% of $118,500 as Social Security tax and 1.45% of his entire salary as Medicare tax.

Social Security tax = 6.2% of $118,500 = $7,347
Medicare tax = 1.45% of $125,000 = $1,812.50
Total payroll tax = $7,347 + $1,812.50 = $9,159.50

Therefore, the correct choice is D, $9,160.

During 2016, Scott Howell Received a Salary of $125,000