Question

# The chief executive officer earns \$21,400 per month. As of May 31, her gross pay was...

The chief executive officer earns \$21,400 per month. As of May 31, her gross pay was \$107,000. The tax rate for Social Security is 6.2% of the first \$118,500 earned each calendar year and the FICA tax rate for Medicare is 1.45% of all earnings. The current FUTA tax rate is 0.6%, and the SUTA tax rate is 5.4%. Both unemployment taxes are applied to the first \$7,000 of an employee’s pay. What is the amount of FICA- Social Security withheld from this employee for the month of June?

• \$310.30

• \$713.00

• \$1,326.80

• \$166.75

• \$7,347.00

Supporting calculations:

FICA-Social Security withheld = (First \$118,500 - Total Gross Pay) * Rate of Social Security Tax

= (\$118,500 - \$107,000) * 6.2/100

= \$11,500*6.2/100

= \$713

Therefore, the FICA-Social Security tax is \$713.

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