Question

Camila is an employee of Trinity Corporation. In 2018 Melissa’s salary was $120,000 and she earned a bonus of $24,000.

How much in Social Security and Medicare taxes must be paid by Largo Corporation and how much of these taxes can it deduct?

How much Social Security and Medicare taxes are paid by Melissa?

Answer 1

The current tax rate for social security is 6.2% for the employer and 6.2% for the employee, or 12.4% total. The current rate for Medicare is 1.45% for the employer and 1.45% for the employee, or 2.9%

Only the social security tax has a wage base limit. The wage base limit is the maximum wage that's subject to the tax for that year. For earnings in 2018, this base is $128,400

There's no wage base limit for Medicare tax. All covered wages are subject to Medicare tax.