Calculate the Social Security and Medicare tax that would be applied to an annual salary of $235,430. Use $106,800 for maximum taxable earnings.
a.
Social Security tax: $1,459.67, Medicare tax: $341.37
b.
Social Security tax: $14,596.66, Medicare tax: $3,413.70
c.
Social Security tax: $662.16, Medicare tax: $341.37
d.
Social Security tax: $6,621.60, Medicare tax: $3,413.70
To calculate the Social Security tax, we need to determine the taxable earnings. The maximum taxable earnings for Social Security tax in 2021 is $106,800.
The Social Security tax is calculated as 6.2% of the taxable earnings.
Taxable earnings: $106,800
Social Security tax: $106,800 * 6.2% = $6,621.60
To calculate the Medicare tax, there is no maximum taxable earnings. It is calculated as 1.45% of the total annual salary of $235,430.
Medicare tax: $235,430 * 1.45% = $3,413.68
Therefore, the correct answer is option d.
Social Security tax: $6,621.60
Medicare tax: $3,413.70
To calculate the Social Security tax, multiply the annual salary by the Social Security tax rate of 6.2% up to the maximum taxable earnings of $106,800.
Social Security tax = $235,430 * 6.2% = $14,596.66
To calculate the Medicare tax, multiply the entire annual salary by the Medicare tax rate of 1.45%.
Medicare tax = $235,430 * 1.45% = $3,413.70
Therefore, the correct answer is:
b. Social Security tax: $14,596.66, Medicare tax: $3,413.70