Angela Anderson is employed as a Tax Manager by Super Cell Phone Service, Inc. She earns $135,000 per year in this role, supervising a department of five Tax Accountants.
Calculate the Medicare taxes that will be withheld from Angela’s annual salary assuming a tax rate of 1.45%.
Calculate the Social Security taxes that will withheld this year for Angela assuming a tax rate of 6.2% and a taxable maximum salary of $110,100.
To calculate the Medicare taxes that will be withheld from Angela's annual salary, follow these steps:
Step 1: Multiply Angela's salary by the Medicare tax rate of 1.45%:
$135,000 * 0.0145 = $1,957.50
So, the amount of Medicare taxes that will be withheld from Angela's annual salary is $1,957.50.
To calculate the Social Security taxes that will be withheld for Angela:
Step 1: Determine Angela's taxable salary for Social Security by comparing her annual salary to the taxable maximum salary. If Angela's salary is equal to or exceeds the taxable maximum salary, then her taxable salary for Social Security will be the taxable maximum salary. However, if her salary is less than the taxable maximum, her taxable salary will be her actual salary. In this case, Angela's salary is $135,000, which exceeds the taxable maximum salary of $110,100.
So, Angela's taxable salary for Social Security is $110,100.
Step 2: Multiply Angela's taxable salary by the Social Security tax rate of 6.2%:
$110,100 * 0.062 = $6,826.20
So, the amount of Social Security taxes that will be withheld from Angela's annual salary is $6,826.20.