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Prior to the last weekly payroll period of the calendar year, the cumulative earnings of employees A and B are \$99,350 and \$91,000 respectively. Their earnings for the last completed payroll period of the year are \$850 each. The amount of earning subject to social security tax at 6% is \$100,000. All earnings are subject to Medicare tax of 1.5%. Assuming that the payroll will be paid on December 29, what will be the employer’s total FICA tax for this payroll period on the two salary amounts of \$850 each?

Computation/Explanation:
Employee A:
SS Tax = \$650 x 6% = \$39
Medicare Tax = \$850 x 1.5% = \$12.75

Employee B:
SS Tax = \$850 x 6% = \$51
Medicare Tax = \$850 x 1.5% = \$12.75

Total FICA tax: \$39 + \$12.75 + \$51 + \$12.75 = \$115.50

Please note that we used \$650 for SS Tax for Employee A’s earning because only \$650 is left until we reach the limit of \$100,000.

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