During 2015, Scott Howell received a salary of $125,000. The social security base amount for 2015 was $118,500. How much payroll tax should have been withheld from Scott's salary for 2015?

Question

Quizplus · Accepted Answer

The social security tax rate for 2015 was 6.2%. The maximum amount of social security tax a person would pay would be the social security base amount ($118,500) multiplied by the tax rate (6.2%). 
So, the maximum social security tax that Scott would have to pay would be $118,500 x 6.2% = $7,347.
However, because Scott's salary ($125,000) is over the social security base amount, he would have to pay the maximum social security tax of $7,347. 
The Medicare tax rate for 2015 was 1.45% with no maximum income limit. 
So, Scott's Medicare tax would be $125,000 x 1.45% = $1,813.75. 
The total payroll tax withheld from Scott's salary for 2015 would be $7,347 (social security tax) + $1,813.75 (Medicare tax) = $9,160. Therefore, the correct answer is D.

During 2015, Scott Howell Received a Salary of $125,000