2) Assume that the Social Security tax rate is 6% and the Social Security maximum is...

2) Assume that the Social Security tax rate is 6% and the Social Security maximum is $140,000 per year.

A) What is the effective tax rate on someone with a $70,000 salary?

$4200

B) What is the effective tax rate on someone with a $140,000 salary?

$8400

C) What is the effective tax rate on someone with a $1,400,000 salary?

Expert Solution

A) Social Security amount = 70000 * 6%

= 4200

Effective rate = 6 %

B) Social Security amount = 140000 * 6%

= 8400

Effective rate = 6 %

C) Social Security amount = 140,000 * 6% ( Because maximum amount is $ 140,000 )

= 8400

Effective rate = 8400 / 1400,000

= 0.60% Answer

jeff jeffy answered 2 years ago

Assume that the social security tax rate is 6% and the Medicare tax rate is 1.5%....

Assume that the social security tax rate is 6% and the Medicare tax rate is 1.5%. In the following summary of data for a payroll period, some amounts have been intentionally omitted: Earnings: 1. At regular rate ? 2. At overtime rate $60,000 3. Total earnings ? Deductions: 4. Social security tax 31,200 5. Medicare tax 7,800 6. Federal income tax withheld 130,000 7. Medical insurance 18,200 8. Union dues ? 9. Total deductions 194,700 10. Net amount paid 325,300...

Assume that social security taxes are payable at a 6% rate on the first $100,000 of...

Assume that social security taxes are payable at a 6% rate on the first $100,000 of earnings and Medicare taxes are payable at a 1.5% rate with no maximum earnings, and that federal and state unemployment compensation taxes total 4.6% on the first $7,000 of earnings. If an employee, Dan, earns $2,500 for the current week and Dan's year-to-date earnings before this week were $6,800, what is the total payroll taxes related to the current week? Please show work to...

An employee who has had Social Security tax withheld in an amount greater than the maximum...

An employee who has had Social Security tax withheld in an amount greater than the maximum for a particular year, may claim a. Such excess as either a credit or an itemized deduction, at the election of the employee, if that excess resulted from correct withholding by two or more employers. b. Reimbursement of such excess from his employers, if that excess resulted from correct withholding by two or more employers. c. The excess as a credit against income tax,...

Calculation of Social Security Tax and Marginal, Average and Effective Tax Rates on Social Security Taxes...

Calculation of Social Security Tax and Marginal, Average and Effective Tax Rates on Social Security Taxes (LO. 1) Rory earns $70,000 per year as a college professor. Latesia is a marketing executive with a salary of $140,000. With respect to the Social Security tax (OASDI: 6.2%; MHI: 1.45%) calculate the following: (Hint: OASDI 6.2% tax is only on max of $128,400 for the year.) When required, round the total taxes to two decimal places. a. Rory's total FICA taxes: $...

FICA Discuss the rationale for a maximum wage base for Social Security and no maximum for...

FICA Discuss the rationale for a maximum wage base for Social Security and no maximum for Medicare. Should there be a maximum base for Social Security and Medicare?

Tax Drill - Social Security Benefits Determine the taxable amount of social security benefits for the...

Tax Drill - Social Security Benefits Determine the taxable amount of social security benefits for the following situations. If an amount is zero, enter "$0". a. Erwin and Eleanor are married and file a joint tax return. They have adjusted gross income of $36,000, no tax-exempt interest, and $12,400 of Social Security benefits. As a result, $_____ of the Social Security benefits are taxable. b. Assume Erwin and Eleanor have adjusted gross income of $12,000, no tax-exempt interest, and $16,000...

What is the combined amount (in percent) of the employee and employer Social Security tax rate? (Assume wages do not exceed $118,500 per year.)

social Security tax is 12.4%. assume you earn 100,000$ a year if instead of paying taxes...

social Security tax is 12.4%. assume you earn 100,000$ a year if instead of paying taxes you could invest in private Social Security.how much would you be in your account after 40 years I don't I don't 8% rate of return?

The personal income tax, corporate income tax, and contributions to social insurance (Medicare and Social Security)...

The personal income tax, corporate income tax, and contributions to social insurance (Medicare and Social Security) together makes up approximately ______ of all federal government tax revenues annually (based on annual data from the period 2010-2015.) A. 95% B. 65% C. 45% D. 15% E. 4.5%

Suppose a pay-as-you-go social security system where social security is funded by a lump sum tax...

Suppose a pay-as-you-go social security system where social security is funded by a lump sum tax (t1) on the young and on the old. Retirement benefits are given out as a fixed amount b to each old consumer. Can social security work to improve welfare for everyone under these conditions? Use diagrams.

Question