Could someone tell me if I am correct on this question?
Laurie expects to make 100,000 in 2007.Her Social Security tax rate is 6.20% up to the wage base.Medicare is 1.45%.How much FICA is Laurie excepted to pay for the year?
$7,495.00 for my answer
Since I don't know the wage base, it is hard to respond.
Multiply .062 by the wage base and .0145 by $100,000, then add these two products for your answer.
If this is what you have done, barring any math errors, your answer should be right.
Thank-You.
The wage base is 97,500.
To calculate the FICA (Federal Insurance Contributions Act) that Laurie is expected to pay for the year, we need to calculate the Social Security tax and the Medicare tax separately.
First, let's calculate the Social Security tax:
1. Determine the wage base: The wage base is the maximum income on which the Social Security tax is calculated. For 2007, the wage base was $97,500.
2. Calculate the amount of income subject to the Social Security tax: Since Laurie expects to make $100,000, but the wage base is $97,500, only the first $97,500 will be subject to the Social Security tax.
So, the amount of income subject to Social Security tax is $97,500.
3. Calculate the Social Security tax amount: The Social Security tax rate is 6.20%. To calculate the tax amount, multiply the amount subject to tax by the tax rate:
Social Security tax = (amount subject to Social Security tax) × (Social Security tax rate)
= $97,500 × 0.0620
= $6,045 (approx.)
Next, let's calculate the Medicare tax:
4. Multiply Laurie's total income ($100,000) by the Medicare tax rate of 1.45%:
Medicare tax = (total income) × (Medicare tax rate)
= $100,000 × 0.0145
= $1,450 (approx.)
Finally, add the Social Security and Medicare taxes together to calculate the total FICA taxes:
Total FICA taxes = Social Security tax + Medicare tax
= $6,045 + $1,450
= $7,495
Therefore, based on the given information, Laurie is expected to pay approximately $7,495 in FICA taxes for the year.