Sharon Wilson has cumulative earnings of $106,900 and earns $5,500 during the current pay period. If the FICA rate is 6.2% for Social Security, with a limit of $113,700, and 1.45% for Medicare, applied to all earnings, the total FICA tax to be withheld for this pay period is:

Question

Quizplus · Accepted Answer

To calculate the FICA tax for Sharon's current pay period, we need to first determine if she has reached the Social Security earnings limit.

$106,900 (cumulative earnings) + $5,500 (current pay period earnings) = $112,400

Since $112,400 is less than the Social Security earnings limit of $113,700, Sharon's entire $5,500 earnings are subject to FICA taxes.

To calculate the Social Security tax: 
$5,500 x 6.2% = $341

To calculate the Medicare tax: 
$5,500 x 1.45% = $79.75

Adding the Social Security tax and Medicare tax together: 
$341 + $79.75 = $420.75

Therefore, the total FICA tax to be withheld for this pay period is $420.75, which is answer choice C.

Sharon Wilson Has Cumulative Earnings of $106,900 and Earns $5,500