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An employee has monthly gross pay of $4,000. What amount of Social Security tax is withheld from this paycheck at a rate of 6.2%?
A$58
B$620
C$248
D$306
Answer & Solution
Correct answer: C. $248
1. Social Security tax is 6.2% of gross pay.
2. Compute: \$4{,}000 \times 6.2\% = \$248.
3. (Medicare at 1.45% would be $58, a separate deduction; do not confuse the two.)
4. Social Security withheld is $248.
_Source: Jonick, Principles of Financial Accounting (CC BY-SA 4.0), §5.2 "Payroll", p.212_
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