Berkley's gross pay for this month is $8,750. His gross pay year-to-date, prior to this month totaled $102,500. What is the amount of FICA withheld from Berkley's pay for this month? (Assume an OASDI rate of 4.2%, applicable on the first $110,100 earnings, and a Medicare rate of 1.45%, applicable on all earnings.)

Question

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First, we need to calculate Berkley's year-to-date earnings, including this month:

$102,500 + $8,750 = $111,250

Next, we need to calculate the FICA taxes withheld for this month:

- OASDI (Social Security) tax = 4.2% of the first $110,100 of earnings
$8,750 x 4.2% = $367.50 (but only up to $110,100)

- Medicare tax = 1.45% of all earnings
$8,750 x 1.45% = $126.88

Total FICA withheld = $367.50 + $126.88 = $494.38

However, since the OASDI tax is only applicable up to $110,100, we need to adjust the calculation:

- OASDI tax = 4.2% of $110,100 (maximum taxable earnings)
$110,100 x 4.2% = $4,620.60

- Medicare tax = 1.45% of $8,750 (all earnings for this month)
$8,750 x 1.45% = $126.88

Total FICA withheld = $4,620.60 + $126.88 = $4,747.48

Finally, we need to subtract the year-to-date FICA withheld from this month's total:

$4,747.48 - ($102,500 x 7.65%) = $446.08

The answer is C: $446.08.

Berkley's Gross Pay for This Month Is $8,750