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An employee has monthly gross pay of $4,000. What amount of Medicare tax is withheld from this paycheck at a rate of 1.45%?
A$248
B$58
C$145
D$40
Answer & Solution
Correct answer: B. $58
1. Medicare tax is 1.45% of gross pay.
2. Compute: \$4{,}000 \times 1.45\% = \$58.
3. (Social Security at 6.2% would be $248, a different deduction.)
4. Medicare withheld is $58.
_Source: Jonick, Principles of Financial Accounting (CC BY-SA 4.0), §5.2 "Payroll", p.212_
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