Homework Answers
B. In this case Cheng has the same gross pay of $198,000 but a self employment loss of $9,000. The employer is liable to withhold and match a FICA (Social Security and Medicare tax) of Social Security (6.2%) and Medicare (1.45%).
FICA taxes would be:
Social Security tax = $198,000 x 0.062 = $12,276
Medicare Tax = $198,000 x 0.0145 = $2,871
Total FICA taxes = $12,276 + $2,871 = $15,147
Since there is a self employment loss, this tax wouldn't apply and additiona medicare tax would apply only on the fixed wage or gross pay component.
Hence Additional medicare tax = $198,000 x 0.0009 = $178.2
Total taxes of Cheng for year 2020 = $15,325
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Exercise 13-31 (b) (LO. 5) Cheng is an employee of KaTuk Corporation. He also has his...
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