Marla Smith,an employee of Clown College,earned $105,000 prior to December.Smith's salary for December is $10,000.For what amount will Smith's December salary be subject to OASDI tax and HI tax,respectively.

Question

Quizplus · Accepted Answer

For OASDI tax, the employee pays 6.2% on the first $142,800 of their annual income. Therefore, for Smith's December salary, $10,000 will be subject to OASDI tax.

For HI tax, the employee pays 1.45% on all their wages with no cap. Therefore, for Smith's December salary, $10,000 will be subject to HI tax.

Therefore, Smith's December salary will be subject to OASDI tax of $620 (6.2% of $10,000) and HI tax of $145 (1.45% of $10,000), for a total of $765, or 7.65% of her salary.

Option B is the correct choice as it shows OASDI tax of $8,700 (6.2% of $142,800) and HI tax of $10,000 (1.45% of $105,000 + 1.45% of $10,000), accounting for the rest of her income earned in the year.

Marla Smith,an Employee of Clown College,earned $105,000 Prior to December