Calculation of Social Security Tax and Marginal, Average andEffective Tax Rates on Social Security Taxes (LO. 1)
Rory earns $70,000 per year as a college professor. Latesia is amarketing executive with a salary of $140,000. With respect to theSocial Security tax (OASDI: 6.2%; MHI: 1.45%) calculate thefollowing:
(Hint: OASDI 6.2% tax is only on max of$128,400 for the year.)
When required, round the total taxes to two decimalplaces.
a.
| Rory's total FICA taxes: | $ | | Latesia's total FICA taxes: | $ |
|
Rounding instructions for parts (b), (c), and (d): Whenrequired, round the tax rates to two decimal places.
b.
| Rory's marginal tax rate: | % | | Latesia's marginal tax rate: | % |
|
c.
| Rory's average tax rate: | % | | Latesia's average tax rate: | % |
|
d.
| Rory's effective tax rate: | % | | Latesia's effective tax rate: | % |
|
