Part 2: Jordan, who is paid monthly, is single and claims 0 deductions. He earns

Question

Part 2:
Jordan, who is paid monthly, is single and claims 0 deductions. He earns $100,000 per year as a manager at a firm. Calculate the taxes withheld from his earnings. Remember, the rate for Social Security Tax is 6.2% of his income up to $97,500. The rate for Medicare is 1.45% (no income cap). See p. 10 for the Federal Income Tax Table." Note: Even though these are not the rates for 2011, they should remain in order to maintain consistency with the course material that is based upon 2007 rates.

Explanation / Answer

social security and medical tax= 6.2% x $97,500 + 1.45% x $100,000 = $ 7495 overall tax = (19660.75 + 7495) /$100,000 =27.2%

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