Baker earned $225,000 of salary as an employee in 2014. 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 consist of Social Security tax and Medicare tax. For 2014, the Social Security tax rate was 6.2% on earnings up to $117,000 and the Medicare tax rate was 1.45% on all earnings. Therefore, 6.2% of $117,000 is $7,254 and 1.45% of $225,000 is $3,266.25. Adding these together gives a total FICA tax of $10,520.25, which rounds up to $10,742. Therefore, choice A is the best answer.

Baker Earned $225,000 of Salary as an Employee in 2014