Sally’s employer paid her $150,000 in wages in 2020. Which of the following is correct? a....

Sally’s employer paid her $150,000 in wages in 2020. Which of the following is correct?

a. all of her wages are subject to social security taxes but only a portion thereof are subject to the Medicare tax

b. all of her wages are subject to Medicare taxes but only a portion thereof are subject to social security taxes

c. she is not subject to either social security taxes or Medicare taxes

d. she is subject to the self employment tax

e. only her wages above $137,700 are subject to social security taxes

Solutions

Expert Solution

Option B - All of her wages are subject to Medicare taxes but only a portion thereof are subject to social security taxes.

Medicare taxes is 2.9% of all covered wages i.e. entire wages whereas social security taxes on annual wages up to $137,700 only.

ekkarill92 answered 2 years ago

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