Multiple Choice
Which of the following are included in an employer's payroll tax expense?
36
views
9. Current Liabilities
Payroll and Payroll Taxes
Struggling with Financial Accounting?
Join thousands of students who trust us to help them ace their exams!Watch the first videoMultiple Choice
What is the total annual FICA tax withheld from an employee earning an annual salary of $38,480, if the FICA tax rate is 7.65%?
A
$2,850.72
B
$2,965.72
C
$2,942.22
D
$2,940.00
Verified step by step guidance1
Step 1: Understand the components of FICA tax. FICA tax includes Social Security tax and Medicare tax, which together make up the total FICA tax rate of 7.65%.
Step 2: Identify the annual salary of the employee, which is $38,480, and the FICA tax rate, which is 7.65%.
Step 3: Convert the FICA tax rate from a percentage to a decimal for calculation purposes. Divide 7.65 by 100 to get 0.0765.
Step 4: Multiply the annual salary ($38,480) by the decimal form of the FICA tax rate (0.0765) to calculate the total annual FICA tax withheld. Use the formula: \( \text{FICA Tax} = \text{Annual Salary} \times \text{FICA Tax Rate} \).
Step 5: Ensure the result is rounded to two decimal places, as financial calculations typically require rounding to the nearest cent.
Related Videos
Related Practice
Payroll and Payroll Taxes practice set
Problem sets built by lead tutorsExpert video explanations