Mike Gundy is a college football coach making a base salary of $2,400,000 a year ($200,000 per month).Employers are required to withhold a 6.2% Social Security tax up to a maximum base amount and a 1.45% Medicare tax with no maximum.Assuming the FICA maximum base amount is $113,700,how much will be withheld during the year for the coach's Social Security and Medicare.

Question

Quizplus · Accepted Answer

First, we need to calculate how much will be withheld for Social Security:
- Multiply the coach's base salary by the Social Security tax rate: $2,400,000 x 6.2% = $148,800
- However, since there is a maximum base amount of $113,700, only that amount will be subject to the Social Security tax. So, the actual amount withheld for Social Security will be $113,700 x 6.2% = $7,047

Next, we need to calculate how much will be withheld for Medicare:
- Multiply the coach's base salary by the Medicare tax rate: $2,400,000 x 1.45% = $34,800

Therefore, the total amount withheld for Social Security and Medicare will be $41,847. This corresponds to choice (B).

Mike Gundy Is a College Football Coach Making a Base