Use the 2016 FICA tax rates, shown below, to answer the following question. If a taxpayer is not self-employed and earns $132,000, what are the taxpayer's FICA taxes? Employee's Rates 7.65% on first $118,500 of income 1.45% of income in excess of $118,500 Matching Rates Paid by the Employer 7.65% on first $118,500 paid in wages 1.45% of wages paid in excess of $118,500 Self-Employed Rates 15.3% on first $118,500 of net profits 2.9% of net profits in excess of $118,500
Use the 2016 FICA tax rates, shown below, to answer the following question. If a taxpayer is not self-employed and earns $132,000, what are the taxpayer's FICA taxes? Employee's Rates 7.65% on first $118,500 of income 1.45% of income in excess of $118,500 Matching Rates Paid by the Employer 7.65% on first $118,500 paid in wages 1.45% of wages paid in excess of $118,500 Self-Employed Rates 15.3% on first $118,500 of net profits 2.9% of net profits in excess of $118,500
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
![### Understanding the 2016 FICA Tax Rates
To calculate the FICA taxes for a taxpayer who is not self-employed and earns $132,000, use the following 2016 FICA tax rates.
#### Employee's Rates
- **7.65%** on the first **$118,500** of income
- **1.45%** of income in excess of **$118,500**
#### Matching Rates Paid by the Employer
- **7.65%** on the first **$118,500** paid in wages
- **1.45%** of wages paid in excess of **$118,500**
#### Self-Employed Rates
- **15.3%** on the first **$118,500** of net profits
- **2.9%** of net profits in excess of **$118,500**
---
To calculate the FICA taxes for an employee:
1. **Calculate on the first $118,500:**
- Employee's contribution: 7.65% of $118,500
- Employer's matching contribution: 7.65% of $118,500
2. **Calculate on earnings in excess of $118,500 (i.e., $132,000 - $118,500 = $13,500):**
- Employee's contribution: 1.45% of $13,500
- Employer's matching contribution: 1.45% of $13,500
Enter the final calculated FICA taxes below:
FICA taxes are $ [ ]
*(Type an integer or a decimal. Round to the nearest cent as needed.)*](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fb8a8da77-9f04-4511-b9d9-b7e746f1af1d%2F5d36e7f5-caf4-4eb3-bb65-3ece3f678350%2Ft0cwkwn_processed.jpeg&w=3840&q=75)
Transcribed Image Text:### Understanding the 2016 FICA Tax Rates
To calculate the FICA taxes for a taxpayer who is not self-employed and earns $132,000, use the following 2016 FICA tax rates.
#### Employee's Rates
- **7.65%** on the first **$118,500** of income
- **1.45%** of income in excess of **$118,500**
#### Matching Rates Paid by the Employer
- **7.65%** on the first **$118,500** paid in wages
- **1.45%** of wages paid in excess of **$118,500**
#### Self-Employed Rates
- **15.3%** on the first **$118,500** of net profits
- **2.9%** of net profits in excess of **$118,500**
---
To calculate the FICA taxes for an employee:
1. **Calculate on the first $118,500:**
- Employee's contribution: 7.65% of $118,500
- Employer's matching contribution: 7.65% of $118,500
2. **Calculate on earnings in excess of $118,500 (i.e., $132,000 - $118,500 = $13,500):**
- Employee's contribution: 1.45% of $13,500
- Employer's matching contribution: 1.45% of $13,500
Enter the final calculated FICA taxes below:
FICA taxes are $ [ ]
*(Type an integer or a decimal. Round to the nearest cent as needed.)*
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
Recommended textbooks for you
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education