Ty has cumulative earnings of $107,600. This week he is paid $3,000. What's the total amount of Social Security tax for this week? Assume a rate of 6.2% on $110,100 for Social Security and 1.45% for Medicare.
Q. Ty has cumulative earnings of $107,600. This week he is paid $3,000. What's the total amount of Social Security tax for this week? Assume a rate of 6.2% on $110,100 for Social Security and 1.45% for Medicare.
Calculate Total Earnings: Calculate Ty's total earnings including this week's pay.Total earnings = Previous earnings + This week's pay= $107,600 + $3,000= $110,600
Determine Taxable Earnings: Determine the amount of earnings subject to Social Security tax. Social Security tax applies to earnings up to $110,100. Since Ty's total earnings are $110,600, only $110,100 is subject to the Social Security tax.
Calculate Social Security Tax: Calculate the Social Security tax for this week.Social Security tax = Earnings subject to Social Security tax × Social Security tax rate= $110,100×6.2%= $110,100×0.062= $6,826.20
More problems from Multi-step problems with percents