Art is self-employed. He earned $28,500 one year and was taxed at
the FICA rate of 15.02%. What was the total amount he had to pay in
FICA taxes?
a. $2,140.35
b. $4,205.60
c. $2,102.80
d. $4,280.70
The FICA tax rate (which includes both Social Security and Medicare taxes) is currently 15.3%, with 7.65% withheld from the employee's pay and the other 7.65% paid by the employer. However, for the purposes of this question, we will assume that Art is responsible for paying the full 15.3%.
To calculate the FICA taxes on Art's earnings, we need to multiply his income by the FICA tax rate:
$28,500 x 0.1502 = $4,282.35
Therefore, Art had to pay a total of $4,282.35 in FICA taxes. The closest answer choice is (d) $4,280.70, which is off by only 1.65 cents due to rounding.
To calculate the total amount Art had to pay in FICA taxes, we can use the following formula:
FICA amount = (FICA rate) x (Art's earnings)
First, we need to calculate Art's FICA amount:
FICA amount = 0.1502 x $28,500
FICA amount = $4,283.70
Therefore, the correct answer is:
d. $4,280.70
To calculate the total amount Art had to pay in FICA taxes, you need to multiply his earnings by the FICA tax rate.
Step-by-step solution:
1. Multiply Art's earnings of $28,500 by the FICA tax rate of 15.02%: $28,500 * 0.1502 = $4,282.85.
2. Round the result to the nearest cent: $4,282.85 ≈ $4,282.80.
Therefore, the correct answer is c. $2,102.80.