Determine The Total Annual FICA Tax For An Annual Salary Of $\$38,480$. (FICA Is $7.65\%$.)a. $\$294.37$ B. $\$717.96$ C. $\$2,385.76$ D. $\$2,943.72$
Understanding FICA Tax
FICA tax, also known as Federal Insurance Contributions Act tax, is a type of tax that is paid by both employees and employers to fund Social Security and Medicare. The tax rate for FICA is 7.65% of an employee's annual salary. In this article, we will determine the total annual FICA tax for an annual salary of $38,480.
Calculating FICA Tax
To calculate the FICA tax, we need to multiply the annual salary by the FICA tax rate. The FICA tax rate is 7.65%, which can be expressed as a decimal by dividing by 100: 7.65 รท 100 = 0.0765.
Step 1: Convert the Annual Salary to a Decimal
First, we need to convert the annual salary to a decimal by dividing by 100: $38,480 รท 100 = 384.80.
Step 2: Multiply the Annual Salary by the FICA Tax Rate
Next, we need to multiply the annual salary by the FICA tax rate: 384.80 ร 0.0765 = 29.4376.
Step 3: Round the Result to Two Decimal Places
Finally, we need to round the result to two decimal places: 29.4376 โ 29.44.
Calculating the FICA Tax
However, the question asks for the FICA tax, not the FICA tax rate. To calculate the FICA tax, we need to multiply the FICA tax rate by the annual salary: 0.0765 ร 38,480 = 2,943.72.
Conclusion
Therefore, the total annual FICA tax for an annual salary of $38,480 is $2,943.72.
Comparison of Options
Let's compare our result with the options provided:
- Option a: $294.37
- Option b: $717.96
- Option c: $2,385.76
- Option d: $2,943.72
Our result matches option d: $2,943.72.
Conclusion
In conclusion, the total annual FICA tax for an annual salary of $38,480 is $2,943.72. This is the correct answer among the options provided.
Frequently Asked Questions
Q: What is FICA tax?
A: FICA tax is a type of tax that is paid by both employees and employers to fund Social Security and Medicare.
Q: What is the FICA tax rate?
A: The FICA tax rate is 7.65% of an employee's annual salary.
Q: How do I calculate the FICA tax?
A: To calculate the FICA tax, you need to multiply the annual salary by the FICA tax rate.
Q: What is the total annual FICA tax for an annual salary of $38,480?
A: The total annual FICA tax for an annual salary of $38,480 is $2,943.72.
References
- Internal Revenue Service (IRS). (2022). FICA Tax.
- Social Security Administration. (2022). FICA Tax.
Additional Resources
- IRS Publication 15: Employer's Tax Guide
- Social Security Administration: FICA Tax Calculator
FICA Tax Q&A: Frequently Asked Questions =============================================
Understanding FICA Tax
FICA tax, also known as Federal Insurance Contributions Act tax, is a type of tax that is paid by both employees and employers to fund Social Security and Medicare. The tax rate for FICA is 7.65% of an employee's annual salary. In this article, we will answer some frequently asked questions about FICA tax.
Q&A
Q: What is FICA tax?
A: FICA tax is a type of tax that is paid by both employees and employers to fund Social Security and Medicare.
Q: What is the FICA tax rate?
A: The FICA tax rate is 7.65% of an employee's annual salary.
Q: Who pays FICA tax?
A: Both employees and employers pay FICA tax. Employees pay 6.2% of their annual salary, and employers pay 1.45% of the employee's annual salary.
Q: What is the purpose of FICA tax?
A: The purpose of FICA tax is to fund Social Security and Medicare.
Q: How is FICA tax calculated?
A: FICA tax is calculated by multiplying the employee's annual salary by the FICA tax rate.
Q: What is the total annual FICA tax for an annual salary of $38,480?
A: The total annual FICA tax for an annual salary of $38,480 is $2,943.72.
Q: Can I deduct FICA tax from my income?
A: No, FICA tax is not deductible from your income.
Q: Can I claim a refund for FICA tax?
A: No, FICA tax is not refundable.
Q: How do I report FICA tax on my tax return?
A: You report FICA tax on your tax return by completing Form W-2 and attaching it to your tax return.
Q: Can I pay FICA tax quarterly?
A: No, FICA tax is paid annually through your employer.
Q: Can I claim a credit for FICA tax?
A: No, FICA tax is not creditable.
FICA Tax Rates
| Tax Rate | Description |
|---|---|
| 6.2% | Employee's share of FICA tax |
| 1.45% | Employer's share of FICA tax |
| 0.9% | Additional Medicare tax (applies to income above $200,000) |
FICA Tax Limits
| Limit | Description |
|---|---|
| $147,000 | Maximum amount subject to FICA tax |
| $200,000 | Threshold for additional Medicare tax |
FICA Tax Forms
| Form | Description |
|---|---|
| W-2 | Reports FICA tax and other income |
| W-3 | Reports FICA tax and other income for employers |
| 941 | Reports FICA tax and other income for employers |
Additional Resources
- IRS Publication 15: Employer's Tax Guide
- Social Security Administration: FICA Tax Calculator
- IRS Form W-2: Wage and Tax Statement
- IRS Form W-3: Transmittal of Wage and Tax Statements
Conclusion
In conclusion, FICA tax is a type of tax that is paid by both employees and employers to fund Social Security and Medicare. The tax rate for FICA is 7.65% of an employee's annual salary. We hope this Q&A article has provided you with a better understanding of FICA tax. If you have any further questions, please don't hesitate to contact us.