question archive Sally's employer paid her $150,000 in wages in 2020
Sally's employer paid her $150,000 in wages in 2020
Subject:AccountingPrice:2.84 Bought3
Sally's employer paid her $150,000 in wages in 2020. Which of the following is correct?
a)all of her wages are subject to social security taxes but only a portion thereof are subject to the Medicare tax
b)all of her wages are subject to Medicare taxes but only a portion thereof are subject to social security taxes
c)she is not subject to either social security taxes or Medicare taxes
d)she is subject to the self employment tax
e)only her wages above $137,700 are subject to social security taxes
Purchase A New Answer
Custom new solution created by our subject matter experts
GET A QUOTE
Answer Preview
- The correct answer is choice E: only her wages above $137,700 are subject to social security taxes
Step-by-step explanation
- For 2020, the Social Security wage base was $137,700. This meant that the Social Security tax only applied to the first $137,700 of one's combined income from wages and self-employment. After that, one could not be charged any additional Social Security tax. There is no limit on the Medicare portion of self-employment tax. So no matter how much you earn, the Medicare tax applies to all of your wages and self-employment income.
