SECTION 2-4 Social Security and Medicare Taxes pp. 124-125.

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Presentation transcript:

SECTION 2-4 Social Security and Medicare Taxes pp. 124-125

Key Words to Know Social Security (p. 124) A federal government program to pay for retirement and disability benefits, financed by taxes. Medicare (p. 124) A federal government program to provide hospitalization insurance, financed by taxes.

Formula Tax Withheld = Gross Pay × Tax Rate

Example 1 Star Buck’s gross biweekly pay is $648.00. His earnings to date for the year total $15,228. What amount is deducted from his pay this week for Social Security? For Medicare? What is the total deduction?

Example 1 Answer: Step 1 Find the Social Security tax withheld. Gross Pay × Tax Rate $648.00 × 6.2% = $40.176 = $40.18

Example 1 Answer: Step 2 Find the Medicare tax withheld. Gross Pay × Tax Rate $648.00 × 1.45% = $9.396 or $9.40

Example 1 Answer: Step 3 Find the total deduction. Social Security Tax + Medicare Tax $40.18 + $9.40 = $49.59

END OF SECTION Homework Pg. 125: 1-21 2-4 Social Security and Medicare Taxes