Question

1) Mahmet earned wages of $138,700 during 2019. He is single and claims two withholding allowances. How much will Mahmet's employer withhold in social security taxes for the year? (Round your answer to 2 decimal places.)

A) $10,166.85

B) $10,610.55

C) $8599.40

D) $8239.80

Answer 1

Answer.

Social Security is financed by a 12.4 percent payroll tax on wages up to the taxable earnings cap, with half (6.2 percent) paid by workers and the other half paid by employers. Self-employed workers pay the whole 12.4 percent.

Security and Medicare payroll taxes are collected together as the Federal Insurance Contributions Act (FICA) tax. FICA tax rates are statutorily set and can only be changed through new tax legislation.