Problem
2016 FICA Tax Rates ${ }^{1}$ \begin{tabular}{|c|c|c|} \hline \begin{tabular}{l} Employee's \\ Rates \end{tabular} & \begin{tabular}{l} Matching Rates \\ Paid by \\ the Employer \end{tabular} & \begin{tabular}{l} Self-Employed \\ Rates \end{tabular} \\ \hline \begin{tabular}{l} - $7.65 \%$ on \\ first \\ $\$ 118,500$ \\ of income \\ $-1.45 \%$ on \\ income \\ above \\ $\$ 118,500$ \end{tabular} & \begin{tabular}{l} $7.65 \%$ on \\ first \\ $\$ 118,500$ \\ paid in \\ wages \\ $-1.45 \%$ on \\ wages \\ above \\ $\$ 118,500$ \end{tabular} & \begin{tabular}{l} $13.3 \%$ on \\ first \\ $\$ 118,500$ of \\ net earnings \\ $-2.9 \%$ on \\ earnings \\ above \\ $\$ 118,500$ \end{tabular} \\ \hline \multicolumn{3}{|c|}{\begin{tabular}{l} ${ }^{1}$ FICA taxes include Social Security and Medicare. The \\ Social Security tax applies to the first $\$ 118,500$ of income, \\ while the Medicare tax applies to all income. \end{tabular}} \\ \hline \end{tabular} Suppose Johnetta has $\$ 60,600$ of income from work and is self-employed. How much will Johnetta have to pay in FICA taxes?
Solution
Step 1 ：Johnetta is self-employed, so we need to use the self-employed rates. According to the table, the self-employed rate is 13.3% on the first $118,500 of net earnings.
Step 2 ：Since Johnetta's income is less than $118,500, we can calculate her FICA taxes by multiplying her income by 13.3%.
Step 3 ：Let's denote the income as \(I\) and the tax rate as \(T\). In this case, \(I = \$60,600\) and \(T = 13.3\%\).
Step 4 ：The FICA taxes can be calculated using the formula \(FICA = I \times T\).
Step 5 ：Substituting the given values into the formula, we get \(FICA = \$60,600 \times 13.3\% = \$8059.8\).
Step 6 ：Final Answer: Johnetta will have to pay \$8059.8 in FICA taxes. So, the final answer is \(\boxed{8059.8}\).
