Questions: To help pay for college, you worked part-time at a local restaurant, earning 14,000 in wages and tips. Use the following information to complete parts (a) through (c). Employee's Rates Matching Rates Paid by the Employer Self-Employed Rates 7.65% on first 142,800 of income 7.65% on first 142,800 paid in wages 15.3% on first 142,800 of net profits 1.45% of income in excess of 142,800 1.45% of wages paid in excess of 142,800 2.9% of net profits in excess of 142,800 a. Calculate your FICA taxes. The FICA taxes are 1071.00. (Round to the nearest cent as needed.) b. Calculate your income tax. Assume you are single with no dependents, have no adjustments or tax credit, and you take the standard deduction. The income tax is . (Round to the nearest cent as needed.)

To help pay for college, you worked part-time at a local restaurant, earning 14,000 in wages and tips. Use the following information to complete parts (a) through (c).

Employee's Rates Matching Rates Paid by the Employer Self-Employed Rates
7.65% on first 142,800 of income 7.65% on first 142,800 paid in wages 15.3% on first 142,800 of net profits
1.45% of income in excess of 142,800 1.45% of wages paid in excess of 142,800 2.9% of net profits in excess of 142,800

a. Calculate your FICA taxes.

The FICA taxes are 1071.00. (Round to the nearest cent as needed.)

b. Calculate your income tax. Assume you are single with no dependents, have no adjustments or tax credit, and you take the standard deduction.

The income tax is . (Round to the nearest cent as needed.)

Transcript text: To help pay for college, you worked part-time at a local restaurant, earning $\$ 14,000$ in wages and tips. Use the following information to complete parts (a) through (c). \begin{tabular}{|c|c|c|} \hline Employee's Rates & Matching Rates Paid by the Employer & Self-Employed Rates \\ \hline 7.65\% on first \$142,800 of income & $7.65 \%$ on first $\$ 142,800$ paid in wages & $15.3 \%$ on first \$142,800 of net profits \\ \hline 1.45\% of income in excess of $\$ 142,800$ & $1.45 \%$ of wages paid in excess of $\$ 142,800$ & 2.9\% of net profits in excess of $\$ 142,800$ \\ \hline \end{tabular} a. Calculate your FICA taxes. The FICA taxes are \$ 1071.00 . (Round to the nearest cent as needed.) b. Calculate your income tax. Assume you are single with no dependents, have no adjustments or tax credit, and you take the standard deduction. The income tax is $\$$ $\square$ (Round to the nearest cent as needed.)

Solution

Solution Steps

To solve the given problem, we need to calculate the FICA taxes and the income tax based on the provided information.

Part (a): Calculate FICA Taxes

FICA taxes consist of Social Security and Medicare taxes.
Social Security tax rate is 6.2% on the first $142,800 of income.
Medicare tax rate is 1.45% on the first $142,800 of income.
Since the income ($14,000) is less than $142,800, we apply the rates directly to the income.

Part (b): Calculate Income Tax

Use the 2021 marginal tax rates for a single filer.
Subtract the standard deduction from the total income to get the taxable income.
Apply the marginal tax rates to the taxable income to calculate the income tax.

Step 1: Calculate FICA Taxes

The FICA taxes consist of Social Security and Medicare taxes. Given the income of $ \$14,000 $:

Social Security Tax: \[ \text{Social Security Tax} = 0.062 \times 14000 = 868.00 \]
Medicare Tax: \[ \text{Medicare Tax} = 0.0145 \times 14000 = 203.00 \]
Total FICA Taxes: \[ \text{FICA Taxes} = 868.00 + 203.00 = 1071.00 \]

Step 2: Calculate Income Tax

To calculate the income tax, we first determine the taxable income by subtracting the standard deduction from the total income: