An employee earns $4,200 gross pay for the month. Calculate the total FICA taxes (employee and employer portions combined).
Correct Answer
A) $642.60
FICA includes Social Security (6.2%) and Medicare (1.45%) for both employee and employer. Total rate = (6.2% + 1.45%) × 2 = 15.3%. $4,200 × 15.3% = $642.60.
Why This Is the Correct Answer
FICA taxes consist of Social Security (6.2%) and Medicare (1.45%) taxes that are paid by both the employee and employer, creating a total combined rate of 15.3%. When calculating the total FICA tax burden for a given salary, you must account for both portions. For $4,200 gross pay: $4,200 × 15.3% = $642.60. This represents the complete FICA tax obligation split equally between employee and employer.
Why the Other Options Are Wrong
Option B: $160.65
This amount ($321.30) represents only half of the total FICA taxes - either just the employee portion or just the employer portion, but the question asks for the combined total of both.
Option D: $321.30
This amount ($160.65) appears to calculate only one component of FICA (either Social Security or Medicare) for one party, missing the majority of the total tax obligation.
Memory Technique
Remember 'FICA 15.3' - Social Security 6.2 + Medicare 1.45 = 7.65, then double it for employee + employer = 15.3% total FICA rate.
Reference Hint
Look up payroll tax calculations in the Business and Finance chapter, specifically the section on employment taxes and FICA requirements.
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