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lana [24]
3 years ago
7

Greger Peterson is a senior manager at a public accounting firm making a base salary of $180,000 a year ($15,000 per month). Emp

loyers are required to withhold a 6.2% Social Security tax up to a maximum base amount and a 1.45% Medicare tax with no maximum. Assuming the Social Security maximum base amount is $128,400, through what month will Social Security be withheld?
Business
1 answer:
evablogger [386]3 years ago
8 0

Answer: The social security tax will be withheld through September.

Explanation:

Social Security maximum base amount = $128,400

social security tax rate = 6.2% = 0.062

Medicare tax = 1.45% = 0.0145

Medicare Tax = no maximum

Base salary = $180,000

Social security tax amount = 0.062 × $128,400 = $7,960.80

Medicare Tax = 0.0145 × $180,000 = $2,610

Social security tax to be withheld = $7,960.80

Social security maximum base amount = $128,400

Monthly salary = $15,000

$128,400 ÷ $15,000 = 8.56

($15,000 × 8) + ($15000×0.56) = $120,000 + $8400

Therefore, the social security tax will be withheld through the ninth month which is between January to September

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