A construction worker earns $28.50 per hour and works 45 hours in a week. Calculate the total FICA taxes (employee portion) that must be withheld from their paycheck.
Correct Answer
A) $103.73
Regular pay: 40 × $28.50 = $1,140. Overtime: 5 × $42.75 = $213.75. Total gross: $1,353.75. FICA: $1,353.75 × 7.65% = $103.73 (6.2% Social Security + 1.45% Medicare).
Why This Is the Correct Answer
Option B correctly calculates the total gross pay including overtime at time-and-a-half rate, then applies the current FICA tax rate of 7.65%. The calculation includes 40 hours at regular pay ($1,140), 5 hours overtime at $42.75/hour ($213.75), for total gross of $1,353.75. The FICA withholding is then $1,353.75 × 7.65% = $103.73.
Why the Other Options Are Wrong
Option B: $114.15
This amount is too high, possibly from incorrectly calculating overtime hours or using an inflated hourly rate in the gross pay calculation.
Option C: $98.51
This amount is too low because it likely miscalculates either the overtime rate or applies an incorrect FICA percentage, resulting in approximately $5 less than the correct amount.
Memory Technique
Remember 'FICA 765' - FICA rate is 7.65%, and overtime kicks in after 40 hours at 1.5x rate (think 'time and a HALF').
Reference Hint
Look up payroll calculations and tax withholding requirements in the Business and Finance Management chapter, specifically sections covering employee compensation and federal tax obligations.
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