Social Security Taxes

7th Income Tax

Vocabulary

• Earned Wages: The income you make from and employer

• Gross Wages: ALL of the income you make before taxes and other deductions

• Payroll Deductions: Items taken away from your gross wages. Insurance, Social Security Tax, Medicare Tax, etc.

• Pay Period: How often you are paid. Example-weekly, biweekly, semi-monthly, monthly

• Withholding Allowance: A portion that is excluded from taxable wages based on claiming yourself and dependents you support

Vocabulary continued

• Taxable Wages: Wages that are left once the withholding allowance is calculated. b

• Social Security Tax: A government based retirement system set up by President Roosevelt in 1935

• Medicare Tax: A government based medical insurance system set up by President Johnson in 1965

• FICA: Federal Insurance Contributions Act which requires all employers to pay social security tax and Medicare tax

• Federal Income Tax: Collected by the US government to fund the business of the government

Open Ended

Amelia earns $540 in a biweekly pay period. She has one withholding allowance. The withholding allowance exempts $3800 annually from income tax. What is her taxable income for the year? What is her taxable income for each pay period (Round to the nearest cent)?

Open Ended

Suppose you are offered a job that pays $59000 annually and that you have one withholding allowance of $3800. What amount is taxable?

Open Ended

Suppose you are offered a job that pays $59000 annually and that you have one withholding allowance of $3800. What is the amount of Federal Income Tax if the rate is $4867.50 plus 25%?

Multiple Choice

Dr. Josef Young earns an adjusted gross weekly income of $2435. The Social Security Tax is 6.2%. How much is withheld?

• $15097

• $150.97

• $138.42

• $1384.20

Multiple Choice

Dr. Josef Young earns an adjusted gross weekly income of $2435. The Medicare Tax is 1.45%. How much is withheld?

• $3530.75

• $353.08

• $35.31

• $1384.20