Question

Tammy Miller's salary for the year was $125,000. Federal income taxes were withheld at $1,000 per month, and state income taxes were withheld at $100 per month. Tammy did not have any benefits or charitable gifts withheld. Calculate withholdings/deductions for the year for Medicare taxes. Round to the nearest dollar.

Group of answer choices

$1,621

$1,813

$1,596

$1,639

Answer 1

Based on the information available in the question, we can answer as follows:-

The Medicare taxes are withheld at the rate of 2.9% on the Gross Taxable Wages of the employee. The 1.45% is the employer's share while the 1.45% is the employee's share.

The amount of Withholding from the employee is :-

Medicare Taxes = $125,000 * 1.45% = $1,812.5

The above amount rounded to the closest dollar is $1,813

Based on the above calculation, the correct answer is Option B - $1,813

Option A is incorrect as this option reduces the federal income taxes and state income taxes for the calculation of the Medicare tax.

Option C and Option D are incorrect per the above calculation as these amounts are incorrect per the above calculations and considerations.

Please let me know if you have any questions via comments and all the best :) !