Entrepreneurship and Small Business Management

Social Security and Medicare Taxes

The Federal Insurance Contributions Act (FICA) requires employers to deduct 7.65% of their employees' incomes for Social Security and Medicare taxes. Social Security (6.2%) is deducted on the first $62,700 of a person's income, and Medicare (1.45%) is paid on the total earnings. You must contribute an amount that equals your employees' contributions. The federal government uses Social Security to pay for retirement and disability benefits and Medicare to provide hospitalization insurance.

Tax Withheld = Pay x Tax Rate

1.		Kate's gross weekly pay is $256.00. Her earnings to date for the year total $12,800. What amount is deducted from her paycheck this week for Social Security taxes?
			A)	$0.00
			B)	$15.87
			C)	$79.36
			D)	$22.50
2.		In problem 1, how much is deducted from Kate's paycheck this week for Medicare taxes?
			A)	$0.00
			B)	$3.71
			C)	$37.12
			D)	$5.01
3.		You pay Sam, your sales clerk, a monthly salary of $2300. His earnings to date are $11,500. How much do you withhold from Sam's pay this month for Social Security taxes?
			A)	$0.00
			B)	$11.50
			C)	$142.60
			D)	$115.07
4.		In problem 4, how much of Sam's monthly pay do you withhold for Medicare?
			A)	$17.05
			B)	$5.67
			C)	$29.80
			D)	$33.35
5.		What is the total amount of FICA taxes you withhold from Sam's monthly pay in problems 3 and 4?
			A)	$175.95
			B)	$148.42
			C)	$119.55
			D)	$29.80
6.		In problem 5, how much do you as the employer pay in FICA taxes for Sam this month?
			A)	$29.80
			B)	$119.55
			C)	$175.95
			D)	$148.42
7.		In problems 5 and 6, what is the total amount of FICA taxes paid this month on Sam's behalf (by you and Sam)?
			A)	$59.60
			B)	$240.10
			C)	$300
			D)	$351.90
8.		Jeanine earns $1300 per week. After how many weeks is Social Security no longer deducted from her paycheck?
			A)	40 weeks
			B)	49 weeks
			C)	45 weeks
			D)	51 weeks
9.		Dean is paid $1300 every two weeks. How much Medicare is withheld from his pay each pay period?
			A)	$18.85
			B)	$22.19
			C)	$2.56
			D)	$14.57
10.		In problem 9, how much Medicare is deducted from Dean's pay in one year?
			A)	$238.61
			B)	$392.14
			C)	$490.10
			D)	$576.94
11.		Anna earns $28,500 per year, paid on a monthly basis. What is her monthly gross pay?
			A)	$2700
			B)	$2375
			C)	$2450
			D)	$2625
12.		In problem 11, how much of Anna's monthly pay is deducted for Social Security and Medicare taxes?
			A)	$175.39
			B)	$144.92
			C)	$201.66
			D)	$181.69
13.		In problem 11, how much does Anna's employer pay every month for Anna's Social Security and Medicare taxes?
			A)	$201.66
			B)	$144.92
			C)	$181.69
			D)	$175.39
14.		In problem 11, how much does Anna pay in Social Security and Medicare taxes in one year?
			A)	$2180.28
			B)	$1998.72
			C)	$1459.28
			D)	$2205.72
15.		In problem 11, how much is paid in one year in Social Security and Medicare taxes in Anna's behalf (by both her and her employer)?
			A)	$3997.44
			B)	$2918.56
			C)	$4360.56
			D)	$4411.44
16.		Dwaine pays each of his 3 employees $520 per week. How much does Dwaine pay each week to match his employees' Medicare withholdings?
			A)	$19.72
			B)	$22.62
			C)	$32.24
			D)	$20.02
17.		In problem 17, how much does Dwaine pay each week to match his employees' Social Security withholdings?
			A)	$59.16
			B)	$67.86
			C)	$60.06
			D)	$96.72
18.		Beth pays her assistant $627 per week. How much is deducted from her assistant's paycheck each week for Social Security?
			A)	$38.87
			B)	$0.00
			C)	$42.29
			D)	$40.72
19.		In problem 18, how much is deducted from Beth's assistant's paycheck each week for Medicare?
			A)	$5.60
			B)	$9.09
			C)	$2.79
			D)	$7.22
20.		Mike's monthly salary is $2764. How much is deducted for Social Security and Medicare from his monthly paycheck?
			A)	$179.43
			B)	$189.50
			C)	$211.45
			D)	$195.63