1. SECTION
2-4
Social Security and
Medicare Taxes pp

2. 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.

3. Formula
Tax Withheld = Gross Pay × Tax Rate

4. Example 1
Star Buck’s gross biweekly pay is $ 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?

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

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

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

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