Question

QUESTION 1

1. The base amount subject to the Social Security portion of FICA is different from that for the Medicare portion of FICA.

   True

   False

QUESTION 2

1. Mary pays $3,000 interest on a qualified student loan in 2020.  She is single and has a modified adjusted gross income of $65,000.  Which of the following statements is correct?

   	a.	Mary is not entitled to any deduction for her student loan interest.
   	b.	Mary is entitled to a from AGI deduction of $2,500.
   	c.	Mary is entitled to a for AGI deduction of $2,500.
   	d.	Mary is entitled to a for AGI deduction of $3,000.

Answer 1

1) Answer:

True,The base amount subject to the Social Security portion of FICA is different from that for the Medicare portion of FICA.

The Federal Insurance Contributions Act (FICA) tax rate, which is the combined Social Security tax rate of 6.2% and the Medicare tax rate of 1.45%, will be 7.65% for 2020 up to the Social Security wage base. For The 2020 Social Security wage base will be $137,700. There is no limit to the wages subject to the Medicare tax; therefore, all covered wages are still subject to the 1.45% tax.

2) Answer:

Taxpayers who file as single are entitled to a full deduction if their modified adjusted gross income (MAGI) is $65,000 or less.  Allowable income tax deduction up to $2,500 of the interest paid on an eligible student loan. Marry is single and has a modified adjusted gross income of $65,000. Therfore she can deduct $2500 in the interest paid on qualified student loans from her taxable income.

Option C) is right answer. Marry is entiled to a for AGI deduction of 2,500.