Question

Mrs. Lincoln was employed by GGH Inc. until October, when he accepted a new position with Murdock Inc. Mrs. Lincoln earned $145,000 compensation from GGH and $36,000 compensation from Murdock. Which of the following statements is false?

Multiple Choice

A. Murdock must withhold Social Security tax from Mrs. Lincoln's $36,000 compensation.

B. Murdock must withhold Medicare tax from Mrs. Lincoln's $36,000 compensation.

C. Mrs. Lincoln is entitled to an income tax credit for both excess Social Security tax and excess Medicare tax withheld by her employers this year.

D. Both GGH and Murdock must pay the full amount of employer payroll tax on the compensation paid to Mrs. Lincoln.

Answer 1

Mrs. Lincoln is entitled to an income tax credit for both excess Social Security tax and excess Medicare tax withheld by her employers this year is FALSE.

Mrs. Lincoln is only entitled to an income tax credit for excess Social Security tax. For Medicare tax there is no wage limit and is payable on all of wages earned.

Mrs. Lincoln can use either Worksheet 3-1 or 3-2 to calculate excess amount and claim credit against income tax

Option C is correct