What is the total annual FICA tax for an annual salary of $38,480?

• A. $2,943.72
• B. $3,245.50
• C. $1,890.00
• D. $4,050.00

Answer: (A)

To determine the total annual FICA tax for an annual salary of $38,480, you need to apply the FICA tax rates appropriately. FICA, which stands for the Federal Insurance Contributions Act, consists of two parts: Social Security and Medicare taxes.

For 2023, the Social Security tax rate is 6.2% on earnings up to a certain limit, and the Medicare tax rate is 1.45% on all earnings.

1. Calculate the Social Security tax:

• Social Security tax = 6.2% of $38,480

• This is calculated as: 0.062 * 38,480 = $2,387.76.

2. Calculate the Medicare tax:

• Medicare tax = 1.45% of $38,480

• This is calculated as: 0.0145 * 38,480 = $557.96.

3. Add these two amounts together to find the total FICA tax:

• Total FICA tax = Social Security tax + Medicare tax

• Total FICA tax = $2,387.76 + $557.96 = $2,945.72.

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