An employee earns $4,200 monthly. Calculate the total FICA taxes (Social Security and Medicare) that must be withheld from their paycheck.
Correct Answer
C) $321.30
Social Security: $4,200 × 6.2% = $260.40; Medicare: $4,200 × 1.45% = $60.90; Total FICA = $260.40 + $60.90 = $321.30
Why This Is the Correct Answer
Option B correctly calculates total FICA taxes by applying both required rates to the monthly salary. Social Security tax is $4,200 × 6.2% = $260.40, and Medicare tax is $4,200 × 1.45% = $60.90. Adding these components together gives the total FICA withholding of $321.30. This represents the combined employee portion of FICA taxes that must be deducted from the paycheck.
Why the Other Options Are Wrong
Option A: $420.00
$378.00 is incorrect because it significantly overstates the FICA tax burden. This amount suggests either incorrect tax rates were used or additional taxes beyond FICA were included in the calculation.
Option B: $378.00
$420.00 is incorrect as it represents exactly 10% of the monthly salary, which doesn't correspond to any standard FICA tax rate. This appears to be a simple percentage error rather than proper FICA calculation.
Memory Technique
Remember FICA rates with 'Six-Two, One-Four-Five': Social Security is 6.2% and Medicare is 1.45%. Total employee FICA rate is 7.65% (6.2% + 1.45%).
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