Multiple Choice
Which term refers to the act of reducing spending in order to save money?
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1. Introduction to Accounting
Types of Accounting
Multiple Choice
Which of the following workers will need to pay their own Social Security insurance?
A
An hourly worker whose employer withholds taxes
B
A self-employed consultant
C
A salaried employee at a corporation
D
A government employee with payroll deductions
Verified step by step guidance1
Understand the concept of Social Security insurance: Social Security is a government program that provides retirement, disability, and survivor benefits. Employees typically have Social Security taxes withheld from their paychecks by their employers, while self-employed individuals are responsible for paying both the employer and employee portions of Social Security taxes.
Identify the key difference between employees and self-employed individuals: Employees have their Social Security taxes automatically deducted from their paychecks by their employers, whereas self-employed individuals must calculate and pay these taxes themselves.
Analyze the options provided: An hourly worker whose employer withholds taxes, a salaried employee at a corporation, and a government employee with payroll deductions all have their Social Security taxes handled by their employers. However, a self-employed consultant does not have an employer to withhold taxes and must pay their own Social Security insurance.
Relate this to the self-employment tax: Self-employed individuals are required to pay the self-employment tax, which includes both the employer and employee portions of Social Security and Medicare taxes. This is calculated using IRS Form SE (Self-Employment Tax).
Conclude that the self-employed consultant is the worker who needs to pay their own Social Security insurance, as they are responsible for managing their own tax obligations without employer assistance.
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