Employee's Rates $ • 7.65% on first $118,500 of income • 1.45% on income above $118,500 2016 FICA Tax Rates¹ Matching Rates Paid by the Employer • 7.65% on first $118,500 paid in wages • 1.45% on wages above $118,500 Self-Employed Rates • 13.3% on first $118,500 of net earnings • 2.9% on earnings above $118,500 1FICA 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. Suppose Brendan has $96,400 of income from work and is self-employed. How much will Brendan have to pay in FICA taxes?
Employee's Rates $ • 7.65% on first $118,500 of income • 1.45% on income above $118,500 2016 FICA Tax Rates¹ Matching Rates Paid by the Employer • 7.65% on first $118,500 paid in wages • 1.45% on wages above $118,500 Self-Employed Rates • 13.3% on first $118,500 of net earnings • 2.9% on earnings above $118,500 1FICA 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. Suppose Brendan has $96,400 of income from work and is self-employed. How much will Brendan have to pay in FICA taxes?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Employee's Rates
$
• 7.65% on first $118,500
of income
• 1.45% on income above
$118,500
2016 FICA Tax Rates¹
Matching Rates Paid by
the Employer
• 7.65% on first $118,500
paid in wages
• 1.45% on wages above
$118,500
Self-Employed Rates
• 13.3% on first $118,500 of
net earnings
2.9% on earnings above
$118,500
¹FICA 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.
Suppose Brendan has $96,400 of income from work and is self-employed. How much will Brendan have to
pay in FICA taxes?
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