Question

I'm honestly stumped on how to calculate these problems. Please help me.
1. Christina will be retiring next month from her job after 35 years as a school bus driver. Over the last 35 years, Christina’s annual salary averaged $22,040. She expects to receive some money each month from Social Security and plans to take the rest of the money she needs to pay the monthly bills from savings. Each month her bills total to about $1,375. Assuming her annual Social Security benefit will be 42% of her salary average, how much will she need to take from savings each month to help pay the bills?
a.

A. At least $771.40
B. At least $603.60
C. At least $629.71
D. At least $1,722.08

2. Calculate the Social Security and Medicare tax that would be applied to an annual salary of $235,430. Use $106,800 for maximum taxable earnings.

A. Social Security tax: $1,459.67, Medicare tax: $341.37
B. Social Security tax: $14,596.66, Medicare tax: $3,413.70
C. Social Security tax: $662.16, Medicare tax: $341.37
D. Social Security tax: $6,621.60, Medicare tax: $3,413.70

3. Determine the total annual FICA tax for an annual salary of $165,000. Use $106,800 for maximum taxable earnings.

A. $901.41
B. $9,014.10
C. $1,262.25
D. $12,622.50

Answer 1

Thank you for posting your math question here. I hope the will help. Please check the below answers, I hope it will be the answers you’re looking for. 

1. At least $1,722.08 
2. Social Security tax: $6,621.60, Medicare tax: $3,413.70 
3. $12,622.50

Answer 2

1. We know from our problem that Christina’s annual salary averaged $22,040. We also know that her annual Social Security benefit will be 42% of her annual averaged salary, so to find the amount of her annual Social Security benefit, we need to find the 42% of $22,040.

Annual Social Security benefit = 42%($22,040) = $9,256.80

Now, to find how much Social Security benefit she will receive per month, we need divide her annual Social Security benefit by the number of months in a year (12):

Monthly Social Security benefit = $\frac{9,256.80}{12}$ = $771.40

Now, her monthly bills total about $1,375, so she will need $1,375 - $771.40 = $603.60 from her savings each month to cover her monthly bills.

We can conclude that the correct answer is B. At least $603.60

2. Social Security tax is calculated by multiplying the taxable wages of the employee by 6.2%, but there is always a wage base limit for Social Security tax. In our problem the base limit is $106,800 (maximum taxable earnings), so to calculate the Social Security that would be applied to an annual salary of $235,430, we just need to calculate the 6.2% of $106,800

Social Security tax = 6.2%($106,800) = $6,621.60

Medicare tax is calculated by multiplying the wages of the employee by 1.45%. There is no wage base limit for Medicare, so to calculate Medicare tax, we are going to find the 1.45% of the total wage, $235,430

Medicare tax = 1.45%($235,430) = $3,413.70

We can conclude that the correct answer is D. Social Security tax: $6,621.60, Medicare tax: $3,413.70

3. The FICA tax is composed of two taxes: Social Security tax and Medicare tax.

Social Security tax is calculated by multiplying the taxable wages of the employee by 6.2%, but there is always a wage base limit for Social Security tax. In our problem the base limit is $106,800 (maximum taxable earnings), so to calculate the Social Security that would be applied to an annual salary of $165,000, we just need to calculate the 6.2% of $106,800

Social Security tax = 6.2%($106,800) = $6,621.60

Medicare tax is calculated by multiplying the wages of the employee by 1.45%. There is no wage base limit for Medicare, so to calculate Medicare tax, we are going to find the 1.45% of the total wage, $165,000

Medicare tax = 1.45%($165,000) = $2,392.50

FICA tax = Social Security tax + Medicare tax

FICA tax = $6,621.60 + $2,392.50 = $9,014.10

We can conclude that the correct answer is B. $9,014.10