The chief executive officer earns $10,000 per month.As of May 31,her gross pay was $50,000.The tax rate for Social Security is 6.2% of the first $128,400 earned each calendar year and the FICA tax rate for Medicare is 1.45% of all earnings.The current FUTA tax rate is 0.6%,and the SUTA tax rate is 5.4%.Both unemployment taxes are applied to the first $7,000 of an employee's pay.What is the amount of FICA-Social Security withheld from this employee for the month of June?

A) $7,347
B) $620
C) $1,240
D) $268
E) $290

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Monika Libert · Accepted Answer

Final Answer : B, Explanation :  The FICA-Social Security tax is 6.2% of earnings, up to the first $128,400. As of May 31, the CEO has earned $50,000, and with a monthly salary of $10,000, the June earnings would not exceed the $128,400 cap. Therefore, the Social Security tax for June is 6.2% of $10,000, which equals $620.

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