Steve is a full-time exempt employee at a local electricity co-operative.He earns an annual salary of $43,325 and is paid biweekly.What is his Social Security tax deduction for each pay period? (Do not round intermediate calculations.Round your final answer to 2 decimal places. )
A)$123.95
B)$103.31
C)$98.67
D)$106.34

Question

Quizplus · Accepted Answer

To calculate Steve's Social Security tax deduction for each pay period, we need to first determine the total amount of his annual salary that is subject to Social Security tax.

For 2021, the Social Security tax rate is 6.2% on the first $142,800 of eligible earnings.

Steve's annual salary of $43,325 is below the taxable earnings cap, so all of his salary is subject to Social Security tax.

Calculating his biweekly pay, we have:

$43,325 / 26 biweekly pay periods = $1,666.35 per pay period

To determine the amount of Social Security tax that will be deducted from Steve's pay, we multiply his gross pay by the Social Security tax rate:

$1,666.35 x 0.062 = $103.31

Therefore, the correct answer is B, $103.31.

Steve Is a Full-Time Exempt Employee at a Local Electricity