For 2024, what is the combined FICA tax rate that employers must pay on employee wages?
Correct Answer
B) 7.65%
FICA consists of Social Security (6.2%) and Medicare (1.45%) for a total employer rate of 7.65%. The employee pays the same rate, making the total FICA tax 15.3%, but the employer portion is 7.65%.
Why This Is the Correct Answer
The employer's FICA tax rate is 7.65%, which consists of two components: Social Security tax at 6.2% and Medicare tax at 1.45%. This is the rate that employers must pay on employee wages up to the Social Security wage base limit. The employer pays this amount in addition to what the employee pays, making it a matching contribution system.
Why the Other Options Are Wrong
Option A: 6.2%
6.2% represents only the Social Security portion of FICA taxes, but excludes the Medicare portion (1.45%), so it's incomplete.
Option C: 12.4%
12.4% would be double the Social Security rate (6.2% x 2), but this doesn't include Medicare and isn't the employer-only rate.
Option D: 15.3%
15.3% is the total FICA tax rate when combining both employer and employee portions (7.65% each), but the question asks specifically for the employer rate only.
Memory Technique
Remember 'Seven-Sixty-Five' - the employer pays 7.65% which sounds like a lucky slot machine combination (7-6-5).
Reference Hint
Look up payroll tax requirements in the business law or employment regulations chapter of your contractor reference manual.
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