Question

You used to earn $76,000 a year in your old job! Suppose you return to college and earn an MBA, after which you get an upper-management position with Yum! Brands. If the tax rates are the same as in 2012 and your starting salary is $125,000, how much will you owe in federal social insurance taxes?

Answer 1

Answer:

Federal social insurance taxes include OASDI taxes (Social Security) and Medicare taxes. Currently. In 2012, the Social Security tax limit was $110,100, while their was no limit on Medicare.

The Social Security tax rate was temporarily reduced during 2011 and 2012 from 6.2% to 4.2%, so your Social Security tax withholdings were $4,624.20 in 2012.

Medicare taxes did not change in 2012 and were 1.45%, so your Medicare tax withholding were $1,812.50 in 2012.