John is a High School principal. He earns $62,299.92 a year and is paid on a semimonthly basis. How much is deducted per pay period for Social Security? How much for Medicare?

Answer alongwith Step-by-step explanation:

1. Social Security

Here Gross income = $62,300

Step 1 Find semiannual income

Semimonthly gross income = $62,300 / 24 = $2595.83

Step 2 Find the social security liability using social security rate and annual income

Social security rate is 6.2%

Social Security Liability = 6.2% x $2595.83 = $160.94 semimonthly payments

Step 3 Find the social security liability using social security rate and annual income

Deduction amount for Social security on monthly basis = $160.94 * 2 =

$321.88 per month

2. Medicare

Here Gross income = $62,300

Step 1 Find semiannual income

Semiannual Gross income = $62,300 / 24 = $2595.83

Step 2 Find the social security liability using Medicare rate and annual income

Medicare rate is 1.45%

Medicare Liability = 1.45% x $2595.83 = $37.64 semimonthly payments

Step 3 Find the social security liability using Medicare rate and annual income

Deduction amount for Social security on monthly basis = $160.94 * 2

= $75.28 per month