An employee earns $65,000 annually. How much Social Security tax will the employer pay for this employee in 2024?
Correct Answer
A) $4,030
The employer pays Social Security tax at 6.2% on wages up to the annual wage base. Since $65,000 is below the 2024 wage base limit, the employer pays $65,000 × 6.2% = $4,030.
Why This Is the Correct Answer
The employer pays Social Security tax at a rate of 6.2% on employee wages up to the annual wage base limit. For 2024, the wage base limit is $168,600, so the full $65,000 salary is subject to Social Security tax. The calculation is straightforward: $65,000 × 6.2% = $4,030. This represents the employer's portion of Social Security taxes that must be paid in addition to what is withheld from the employee's paycheck.
Why the Other Options Are Wrong
Option B: $2,015
This amount ($2,015) represents only half of the correct Social Security tax calculation. This might be the result of incorrectly using 3.1% instead of 6.2%, or confusing this with some other payroll calculation.
Option C: $8,060
This amount ($8,060) represents double the correct Social Security tax. This error likely occurs from incorrectly adding both the employer and employee portions together (6.2% + 6.2% = 12.4%), but the question only asks for the employer's portion.
Option D: $942.50
This amount ($942.50) is far too low and appears to use an incorrect tax rate. This might result from using 1.45% (the Medicare tax rate) instead of 6.2% (the Social Security tax rate).
Memory Technique
Remember 'Social Security 6.2' - the employer pays 6.2% for Social Security (separate from the 1.45% Medicare rate). Think 'Six-point-Two for Social Security' as an alliteration.
Reference Hint
Look up payroll taxes and Social Security contributions in the Business and Finance chapter, specifically the section on employer tax obligations and FICA requirements.
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