A general contractor has gross wages of $85,000 for an employee in 2024. What is the total FICA tax liability (employer and employee combined) for this employee?
Correct Answer
A) $13,005.00
FICA includes Social Security (6.2% × 2 = 12.4%) and Medicare (1.45% × 2 = 2.9%). Total FICA rate is 15.3% for employer and employee combined. $85,000 × 15.3% = $13,005.00.
Why This Is the Correct Answer
FICA taxes consist of Social Security tax (6.2% each for employer and employee = 12.4% total) and Medicare tax (1.45% each for employer and employee = 2.9% total). The combined FICA tax rate is 15.3% when including both employer and employee portions. Since the $85,000 wage is below the 2024 Social Security wage base limit of $168,600, the full 15.3% applies to the entire amount, resulting in $85,000 × 15.3% = $13,005.00.
Why the Other Options Are Wrong
Option C: $11,985.00
This amount appears to be calculated using an incorrect FICA rate of approximately 14.1%, which doesn't correspond to any standard FICA tax calculation.
Option D: $6,502.50
This represents only half of the employee's FICA contribution, calculated as $85,000 × 7.05% = $5,992.50, which uses an incorrect rate and doesn't include the employer portion.
Memory Technique
Remember 'FICA 15-3': FICA total rate is 15.3% (Social Security 12.4% + Medicare 2.9% for both employer and employee combined)
Reference Hint
IRS Publication 15 (Circular E) - Employer's Tax Guide, Chapter on Federal Income Tax Withholding and FICA taxes
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