Calculate the total FICA taxes (employer portion) for an employee earning $52,000 annually.
Correct Answer
D) $3,978
FICA taxes include Social Security (6.2%) and Medicare (1.45%). Total FICA rate is 7.65%. $52,000 × 0.0765 = $3,978.
Why This Is the Correct Answer
FICA taxes consist of two components that employers must pay: Social Security tax at 6.2% and Medicare tax at 1.45%. When combined, the total employer FICA tax rate is 7.65% of the employee's gross wages. For an employee earning $52,000 annually, the calculation is straightforward: $52,000 × 0.0765 = $3,978. This represents the employer's portion of FICA taxes that must be paid in addition to the employee's portion.
Why the Other Options Are Wrong
Option B: $3,224
This amount ($3,224) represents approximately 6.2% of $52,000, which would be only the Social Security portion of FICA taxes. This calculation omits the Medicare tax portion (1.45%), making it incomplete for total FICA taxes.
Option C: $4,284
This amount ($3,536) represents approximately 6.8% of $52,000, which is close to but not the correct FICA rate. This suggests an error in the tax rate calculation, possibly confusing state unemployment or other payroll tax rates with FICA rates.
Memory Technique
Remember 'FICA 765' - FICA rate is 7.65% (like the last three digits). Social Security is 'sick-point-two' (6.2%) and Medicare is 'one-point-four-five' (1.45%).
Reference Hint
Look up payroll tax calculations in the Business and Finance chapter, specifically the section on employer tax obligations and FICA requirements.
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