Question

TB MC Qu. 09-101 An employee earned... An employee earned $43,700 working for an employer in the current year. The current rate for FICA Social Security is 6.2% payable on earnings up to $128.400 maximum per year and the rate for FICA Medicare 145%. The employer's total FICA payroll tax for this employee is:

Answer 1

The FICA tax (Federal Insurance Contribution Act) tax is an employee payroll tax that funds Social Security benefits and Medicare health insurance. The tax is split between employers and employees.Two types of taxes fall under the category of FICA taxes: Medicare taxes and Social Security taxes.

To calculate FICA tax contribution for an employee, multiply their gross pay by the Social Security and Medicare tax rates. So here the employee is earning an amount of 43700 dollars in the current year.So in social security taxes,in addition to paying this 43700 the employer will also pay 6.2% of 43700 which is 2709.4.(The employee will also contribute a similar amount).In medicare also the employer will contribute 1.45% of 43700 that is 633.65.Thus the total amount contributed by the employer alone becomes 3343.05 or 3343 dollars.