A general contractor has total payroll of $45,000 for the quarter. What is the total FICA tax obligation (employer and employee combined) that must be paid?
Correct Answer
A) $6,885.00
FICA tax includes Social Security (6.2%) and Medicare (1.45%) for both employer and employee. Total rate is 15.3% (7.65% × 2). $45,000 × 0.153 = $6,885.00.
Why This Is the Correct Answer
FICA tax consists of Social Security (6.2%) and Medicare (1.45%) taxes paid by both employer and employee. The combined rate is 15.3% (7.65% each for employer and employee). For a $45,000 quarterly payroll, the total FICA obligation is $45,000 × 0.153 = $6,885.00. This represents the complete tax burden that must be remitted to the IRS.
Why the Other Options Are Wrong
Option B: $2,790.00
$2,790.00 represents only the employee's portion of FICA taxes ($45,000 × 0.062 = $2,790 for Social Security only). This calculation omits the Medicare portion and the employer's matching contribution, significantly understating the total obligation.
Option C: $3,442.50
$3,442.50 represents only the employee's total FICA contribution ($45,000 × 0.0765 = $3,442.50). This calculation fails to include the employer's matching contribution of the same amount, resulting in exactly half the correct total obligation.
Option D: $5,580.00
$5,580.00 appears to calculate Social Security taxes for both employer and employee ($45,000 × 0.124 = $5,580) but omits Medicare taxes entirely. This partial calculation misses the Medicare component of 2.9% combined rate.
Memory Technique
Remember 'FICA 15.3 SPLIT': FICA total rate is 15.3% (Social Security 12.4% + Medicare 2.9%) SPLIT equally between employer and employee at 7.65% each.
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