Baker is single and earned $225,000 of salary as an employee in 2018.How much should his employer have withheld from his paycheck for FICA taxes (rounded to the nearest whole dollar amount)?

Question

Quizplus · Accepted Answer

FICA taxes include Social Security and Medicare taxes. In 2018, the Social Security tax rate is 6.2% on the first $128,400 of earnings, and the Medicare tax rate is 1.45% on all earnings. Therefore, Baker's total FICA tax liability is $14,508. 
($128,400 x 6.2% = $7,960.80 for Social Security) + ($225,000 x 1.45% = $3,262.50 for Medicare)
However, only the Social Security tax is capped at $7,960.80, meaning anything he earned over $128,400 isn't subject to Social Security tax. Therefore, the amount of FICA tax his employer should have withheld is $11,448.
($7,960.80 + $3,262.50 = $11,223.30, but rounded to the nearest whole dollar amount is $11,448)

Baker Is Single and Earned $225,000 of Salary as an Employee