Question 6.3.2: Shannon Woolums has earned $127,634.05 so far this year. Her......
Shannon Woolums has earned $127,634.05 so far this year. Her gross earnings for the current pay period are $5224.03. Find her Social Security tax.
The Social Security tax applies only to the first $130,000 in earnings. Since the current pay period amount would increase Woolums’s income to over $130,000, first subtract earnings from $130,000.
\begin{matrix}Maximum\ earnings\ subject\ to\ Social\ Security & \ \ \ \ \ \$130,000.00\ \ \ \\ Prior\ earnings\ for\ the\ year \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ & \underline{-\ 127,634.05} \\ Amount\ subject\ to\ Social\ Security\ tax \ \ \ \ \ \ \ \ \ \ \ \ \ \ & \ \ \ \mathbf{\ \$2,365.95}\end{matrix}
Social Security tax = 0.62 × $2365.95 = $146.69
No additional Social Security tax will be withheld for the remainder of the year.