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Greger Peterson is a senior manager at a public accounting firm making a base salary of $180,000 a year ($15,000 per month). Employers are required to withhold a 6.2% Social Security tax up to a maximum base amount and a 1.45% Medicare tax with no maximum. Assuming the Social Security maximum base amount is $128,400, through what month will Social Security be withheld?

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  1. Today, 07:46
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    Answer: The social security tax will be withheld through September.

    Explanation:

    Social Security maximum base amount = $128,400

    social security tax rate = 6.2% = 0.062

    Medicare tax = 1.45% = 0.0145

    Medicare Tax = no maximum

    Base salary = $180,000

    Social security tax amount = 0.062 * $128,400 = $7,960.80

    Medicare Tax = 0.0145 * $180,000 = $2,610

    Social security tax to be withheld = $7,960.80

    Social security maximum base amount = $128,400

    Monthly salary = $15,000

    $128,400 : $15,000 = 8.56

    ($15,000 * 8) + ($15000*0.56) = $120,000 + $8400

    Therefore, the social security tax will be withheld through the ninth month which is between January to September
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