Income Tax Fundamentals 2020
38th Edition
ISBN: 9780357391129
Author: WHITTENBURG
Publisher: Cengage
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Question
Chapter 9, Problem 9MCQ
To determine
Concept Introduction:
The FICA taxes: The Federal Insurance Contribution Act imposes the Social Security and Medicare Tax that provide benefits to qualified retired and disable workers. Both employers and employees are allowed to pay FICA taxes.
To indicate: The statement that is not true under FICA tax
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Students have asked these similar questions
Which of the following statements about the FICA tax is not true?
a. The income amount subject to the Social Security portion of FICA tax has increased significantly over the years.
b. No FICA taxes are required to be paid by employees or employers in 2020 due to COVID
c. The FICA tax is composed of two parts, Social Security and Medicare.
xd. Self-employed individuals pay self-employment taxes.
Oe. Wages subject to FICA tax that are received by a self-employed individual reduce the individual's maximum Social Security tax base.
For 2018, the Social Security portion of the FICA tax is imposed at a rate of (not including any additional tax for high-income earners):
a.6.2 percent for the employee and 7.65 percent for the employer.
b.6.2 percent for only the employer.
c.6.2 percent for the employee and 6.2 percent for the employer.
d.6.2 percent for only the employee.
e.None of these choices are correct.
Your pay also includes a deduction for Medicare. The 2022 rate is 1.45% of your annual salary as listed in question three. Do not use your taxable income as done in previous questions. If 1.45% of your earnings are deducted for Medicare, how much is deducted from your salary within one year? (Note: There is not a maximum contribution for Medicare; all earned wages are taxed. Your employer is required to match this amount too.)
Question 3 Base Salary= 24.94
Week=1066
Month=4125
Year=58261
Chapter 9 Solutions
Income Tax Fundamentals 2020
Ch. 9 - Prob. 1MCQCh. 9 - Abbe, age 56, is married and has two dependent...Ch. 9 - Prob. 3MCQCh. 9 - Prob. 4MCQCh. 9 - Prob. 5MCQCh. 9 - Estimated payments for individual taxpayers are...Ch. 9 - Prob. 7MCQCh. 9 - Prob. 8MCQCh. 9 - Prob. 9MCQCh. 9 - Prob. 10MCQ
Ch. 9 - Ran's wage income is $47,350 in 2019. The combined...Ch. 9 - Prob. 12MCQCh. 9 - Prob. 13MCQCh. 9 - Prob. 14MCQCh. 9 - Prob. 15MCQCh. 9 - Prob. 16MCQCh. 9 - Prob. 17MCQCh. 9 - Prob. 18MCQCh. 9 - Prob. 19MCQCh. 9 - Prob. 20MCQCh. 9 - Prob. 21MCQCh. 9 - Bonnie is getting close to retirement and realizes...Ch. 9 - Prob. 1PCh. 9 - Prob. 2PCh. 9 - Prob. 3PCh. 9 - Prob. 4PCh. 9 - Kana is a single wage earner with no dependents...Ch. 9 - Lamden Company paid its employee, Trudy, wages of...Ch. 9 - Fiduciary Investments paid its employee, Yolanda,...Ch. 9 - Thuy worked as the assistant manager at Burger...Ch. 9 - Prob. 11PCh. 9 - Prob. 13PCh. 9 - Prob. 14PCh. 9 - Allen (age 32) takes a distribution of $20,000...
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Similar questions
- Which of the following taxes are not withheld from an employee? a. FICA Social Security b. Federal Unemployment (FUTA) c. FICA Medicare d. Federal Income Tax e. All of the above are withheldarrow_forwardWhat portions of an employees take-home pay are exempt from a federal tax levy?arrow_forwardThe sole purpose of Social Security taxes is to provide retirement benefits to employees. True False The Social Security wage base for 2019 is $132,900. True False Taxable earnings for Social Security tax are always the same as taxable earnings for federal income tax withholding. True False Collectively, Social Security tax and Medicare tax are referred to as FICA taxes. True False The income threshold for Medicare tax indicates the income level above which no Medicare taxes are levied. True False Employees are required to contribute toward the purchase of disability insurance in all 50 states. True False The contribution limit for a SIMPLE IRA is lower than that for a 401(k) or 403(b). True False ERISA is a set of regulations that dictate the manner in which a cafeteria plan may be administered. True False Flexible spending accounts contain a use it or lose it feature that, although…arrow_forward
- If a taxpayer has $40,000 of employee salary in 2019, how much will be withheld for the Social Security and Medicare taxes?arrow_forwardUse the 2021 FICA tax rates, shown, to answer the following question. If a taxpayer is self-employed and earns $156,000, what are the taxpayer's FICA taxes? Employee's Rates 7.65% on first $142,800 of income 1.45% of income in excess of $142,800 Matching Rates Paid by the Employer 7.65% on first $142,800 paid in wages 1.45% of wages paid in excess of $142,800 Self-Employed Rates 15.3% on first $142,800 of net profits 2.9% of net profits, in excess of $142,800 The FICA taxes are $ (Round to the nearest cent as needed.)arrow_forwardHow do I calcuate the OASDI and HI self-employment tax? For example Jason Knightly has self-employment earnings of $229,000. What would be his total 2021 self-employment tax?arrow_forward
- The Federal Insurance Contributions Act (FICA) requires employers to deduct a percent of your income as taxes for Social Security to pay pays for retirement and disability benefits. On a payroll statement Social Security and Medicare are under one umbrella: FICA Gross Pay * 6.2%= Social Security tax Withheld (6.2% = .062) nts Gross Pay * 1.45% = Medicare tax Withheld (1.45% = .0145) FICA = Social Security Tax + Medicare Taxarrow_forwardFor each individual, calculate the self-employment tax. Assume that each individual files tax returns under single status. Remember, the additional Medicare Tax threshold that applies to sel-employment income is based on the employee's filing status, but to simplify the process for employers, the IRS requires that Additional Medicare Tax be withheld from all employees who earn more than $200,000 in a single year, regardless of filing status. Martin Hughes earns net self-employment income of $149,900. He works a second job from which he receives FICA taxable earnings of $129,200.Self-Employment tax = $ What is the self employement tax? (Self employment tax=net self employment income x 15.3% However, for individuals who have net self-employment income exceeding $200,000 (or $250,000 for married filing jointly), there's an additional Medicare Tax of 0.9% on the excess amount.)arrow_forwardWhich of the following is true regarding Social Security benefits? a.Up to 100 percent of Social Security benefits received may be included in taxable income. b.Social Security benefits are always excluded because wages are subject to Social Security tax when earned. c.The Social Security inclusion formula is the same amount for each filing status. d.Tax-exempt interest income must be included in the formula used to determine if Social Security is included in taxable income.arrow_forward
- 1. Who assigns the SUTA tax rate to an employer? Answer: A. The Internal Revenue Service B. The state in which the employer is located C. The Social Security Administration D. The American Payroll Association 2. What is the due date for the first quarter FUTA tax? Answer: A. April 30 B. March 30 C. April 15 D. None of these options 3. Match each tax with its associated feature. SUTA Self-employment Social Security and Medicare The employer presently matches the amount employees pay. If net SE income is below $400, no tax is due. The number of laid-off employees may affect it.arrow_forwardFor each individual, calculate the self-employment tax. Assume that each individual files tax returns under single status. Remember, the additional Medicare Tax threshold that applies to sel-employment income is based on the employee's filing status, but to simplify the process for employers, the IRS requires that Additional Medicare Tax be withheld from all employees who earn more than $200,000 in a single year, regardless of filing status. 1: Allison Wilson earns net self-employment income of $62,700. She does not work a second job.Self-Employment tax = $ 2: Martin Hughes earns net self-employment income of $149,900. He works a second job from which he receives FICA taxable earnings of $129,200.Self-Employment tax = $ 3: Elisa Grant earns net self-employment income of $198,000. She works a second job from which she receives FICA taxable earnings of $100,400.Self-Employment tax = $arrow_forward
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