Calculate the social security and medicare tax that would be applied to an annual salary of $125,000. use $106,800 for maximum taxable earnings.
a.
social security tax: $77,500.00, medicare tax: $18,125.00
b.
social security tax: $7,750.00, medicare tax: $1,812.50
c.
social security tax: $66,216.00, medicare tax: $18,125.00
d.
social security tax: $6,621.60, medicare tax: $1,812.50

select the best answer from the choices provided

d.

Social Security tax: $6,621.60, Medicare tax: $1,812.50

Step-by-step explanation:

Given

=$125000

=$106800

As the employees annual salary is greater than the taxable earning, so the social security tax will be applied.

The social security tax is 6.2% of the taxable earnings.

So,

=6.2%

=$106800∗ 6.2100

=$106800∗0.062

=$6621.6

Medicare tax is 1.45% of the gross pay. So

=$125000∗ 1.45100

=$125000∗0.0145

=$1812.5

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