Answer:
Nanny's Portion of Social Security is $442.68
Ann's Portion of Social Security Tax is $442.68
Nanny's Portion of Medicare Tax is $103.53
Ann's Portion of Medicare Tax is $103.53
Explanation:
As explained by the Internal Revenue Service (IRS) under "Topic No. 751 Social Security and Medicare Withholding Rates", the social security tax rate are 6.2 percent for the employer and 6.2 percent for the employee, while the Medicare rate for employee is 1.45 percent and it is also 1.45 percent for the employer. In addition, the wage base limit for 2020 social security tax is $137,700.
Base on the above, we proceed as follows:
Step 2: Calculation total salary of nanny
Total salary of nanny = weekly rate × number of weeks worked
= $170 × 42
= $7,140
Step 2: Calculation of social security tax
Since the nanny's salary is below the wage base limit of $137,700, the tax rates are applied to the actual salary of $7,140 as follows:
Nanny's Portion of Social Security Tax = $7,140 × 6.2% = $442.68
Ann's Portion of Social Security Tax = $7,140 × 6.2% = $442.68
Step 3: Calculation of Medicare tax
Since there is no wage base limit for Medicare tax, the tax rates are applied to the actual salary of $7,140 as follows:
Nanny's Portion of Medicare Tax = $7,140 × 1.45% = $103.53
Ann's Portion of Medicare Tax = $7,140 × 1.45% = $103.53
