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Social Security & Medicare Taxes

SECTION 2-4. pp. 124-125. Social Security & Medicare Taxes. Section Objective. Work out: The amount of income withheld for Social Security taxes The amount of income withheld for Medicare taxes. Key Words to Know. Social Security (p. 124)

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Social Security & Medicare Taxes

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  1. SECTION 2-4 pp. 124-125 Social Security & Medicare Taxes

  2. Section Objective Work out: • The amount of income withheld for Social Security taxes • The amount of income withheld for Medicare taxes

  3. Key Words to Know Social Security (p. 124) A federal government program to pay for retirement and disability benefits, financed by taxes. Medicare (p. 124) A federal government program to provide hospitalization insurance, financed by taxes.

  4. Formula Tax Withheld = Gross Pay ×Tax Rate

  5. Jack’s Jackpot p. 124 Why is Social Security important?

  6. Example 1 Otis Hassan’s gross biweekly pay is $648.00. His earnings to date for the year total $15,228. What amount is deducted from his pay this week for Social Security? For Medicare? What is the total deduction?

  7. Example 1 Answer: Step 1 Find the Social Security tax withheld. Gross Pay ×Tax Rate $648.00 ×6.2% = $40.176 = $40.18

  8. Example 1 Answer: Step 2 Find the Medicare tax withheld. Gross Pay ×Tax Rate $648.00 ×1.45% = $9.396 or $9.40

  9. Example 1 Answer: Step 3 Find the total deduction. Social Security Tax +Medicare Tax $40.18 + $9.40 = $49.58

  10. Practice 1 Find the Social Security and Medicare taxes withheld for this pay period. Tom Mendoza. Monthly salary $4,800. $52,800 earned this year to date. How much deducted this pay period for Social Security? For Medicare?

  11. Practice 1 Answer For Social Security: $297.60 For Medicare: $69.60

  12. Practice 2 Stephanie Metcalf earns $91,992 a year. Her salary is paid monthly. What are her year-to-date earnings for November? How much is deducted from her check in November for Social Security? For Medicare? How much is deducted from her check in December for Social Security? For Medicare?

  13. Practice 2 Answer Year-to-date earnings for November: $84,326 Social Security deduction in November: $475.29 Medicare deduction in November: $111.16 Social Security deduction in December: $351.79 Medicare deduction in December: $111.16

  14. END OF SECTION 2-4 Social Security & Medicare Taxes

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