Lucky Louie's base salary is $90,000 per year and he earns an additional $75,000 in annual bonus.Luckily,Lucky only has to pay FICA on
A) his base salary.
B) his base salary plus bonus up to the annual legal withholding limit for FICA.
C) all of his earnings.
D) $130,000.

Question

Quizplus · Accepted Answer

FICA taxes are only withheld on income up to a certain limit each year. For 2021, the limit is $142,800. Lucky's base salary alone is under this limit, so he would only have to pay FICA taxes on that amount. However, if his total income (including the bonus) exceeds the limit, he would have to pay FICA on the portion of the bonus that exceeds the limit. Therefore, the best choice is option B, which states that FICA is only paid on Lucky's base salary plus bonus up to the annual FICA withholding limit.

Lucky Louie's Base Salary Is $90,000 Per Year and He