Social Security taxes are another sizeable amount taken from the check of nearly all workers. In 2019, 6.2 percent of your earni
ngs up to $132,900 goes to pay for the Social Security payments that you will get when you retire. An additional 1.45 percent of your pay (with no ceiling) is taken to pay for Medicare health insurance which covers your medical expenses when you turn 65. This is a total of 7.65 percent of your pay which is matched by your employer. In Joey’s case, 7.65 percent of his gross income is taken out of his check for Social Security and Medicare tax and forwarded to the government by his employer. Since his annual pay is $20,800, this amounts to $1,591.20 per year or $30.60 per week ($20,800 x 7.65 = $1,591.20 which, divided by 52 weeks = $30.60 per week). This is much more than Joey pays in Federal income tax!
If you work for yourself, you are considered to be your own employer and you must pay double the amount of Social Security and Medicare taxes to the government. For most people, this is 7.65% times 2 = 15.3%.
If Joey worked for himself and called his company "Joey's Construction Company" and made $21,000 per year, how much would he pay per year in total Social Security and Medicare tax? A. $3,213 B. $1,163 C. $3,182.40 D. $1,591.20
