Problem

Dr. Josef Young earns an adjusted gross weekly income of $\$ 2,594$. How much Social Security tax should be withheld the first week of the year? How much Medicare tax should be withheld? The Social Security tax rate is $6.2 \%$ from earnings to be taxed to a maximum annual wage of $\$ 147,000$. The Medicare tax rate is $1.45 \%$ from all earnings to a maximum annual wage of $\$ 200,000$. The Social Security tax is $\$ \square$. (Round to the nearest cent as needed.) The Medicare tax is $\$ \square$. (Round to the nearest cent as needed.)

Solution

Step 1 :Define the weekly income as $2594.

Step 2 :Define the Social Security tax rate as $6.2 \%$ and the Medicare tax rate as $1.45 \%$.

Step 3 :Calculate the Social Security tax by multiplying the weekly income by the Social Security tax rate: $2594 \times 0.062 = 160.83$.

Step 4 :Calculate the Medicare tax by multiplying the weekly income by the Medicare tax rate: $2594 \times 0.0145 = 37.61$.

Step 5 :Round the results to the nearest cent: Social Security tax is $160.83$ and Medicare tax is $37.61$.

Step 6 :Final Answer: The Social Security tax is \(\boxed{160.83}\) dollars and the Medicare tax is \(\boxed{37.61}\) dollars.

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