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Mike Samson is a college football coach making a base salary of $652,800 a year ($54,400 per month). Employers are required to withhold a 6.2% Social Security tax up to a maximum base amount and a 1.45% Medicare tax with no maximum. Assume the FICA base amount is $128,400.

Required:
a. Compute how much will be withheld during the year for Coach Samson's Social Security and Medicare.
b. What matching amount will the employer need to contribute?

Answer :

JEPESSOAGO

Answer:

a. Compute how much will be withheld during the year for Coach Samson's Social Security and Medicare.

the current social security cap (for 2020) is $137,700. This means that $137,700 x 6.2% = $8,537.40 will be withheld during the year.

but since this question seems to be a little old (2018 actually), the maximum withholding should be $128,400 x 6.2% = $7,960.80 for social security

Medicare withholdings have no limit, but instead people earning above $200,000 must pay an additional 0.9%:

Medicare withholdings = ($200,000 x 1.45%) + ($452,800 x 2.35%) = $13,540.80

b. What matching amount will the employer need to contribute?

the employer must pay the $7,960.80 in social security taxes, but the employer only pays 1.45% for medicare taxes = $652,800 x 1.45% = $9,465.60

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