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 Social Security maximum base amount is $118,500,how much will be withheld during the year for the coach's Social Security and Medicare.
A)$34,800.
B)$42,147.
C)$148,800.

Question

Quizplus · Accepted Answer

First, we need to calculate the annual amount of Social Security tax that will be withheld:

$118,500 max taxable earnings x 6.2% Social Security tax rate = $7,347 max Social Security tax

However, since Coach Gundy earns $2,400,000 per year, the total amount of Social Security tax that will be withheld will be:

$7,347 max Social Security tax x (2,400,000 ÷ 118,500) = $148,800 total Social Security tax

Next, we need to calculate the annual amount of Medicare tax that will be withheld:

$2,400,000 annual salary x 1.45% Medicare tax rate = $34,800 total Medicare tax

Therefore, the total amount that will be withheld during the year for the coach's Social Security and Medicare is:

$148,800 Social Security tax + $34,800 Medicare tax = $183,600

Since none of the answer choices match exactly, the closest answer is B, which is $42,147. However, this calculation is incorrect since it only includes the Medicare tax and not the Social Security tax. The correct answer that includes both taxes is $183,600.

Mike Gundy Is a College Football Coach Making a Base