Question

tim mogilnitsky is a self - employed researcher. he pays fica at a rate of 12.4% and medicare at a rate of 2.9%. find the dollar amount of these taxes on the annual adjusted earnings of $42,986.35. tim’s fica tax is $5330.31 (round to the nearest cent.) tim’s medicare tax is $\square$. (round to the nearest cent.)

Explanation:

Step1: Identify the formula for tax calculation

To find the Medicare tax, we use the formula: Tax = Earnings × Tax Rate.

Step2: Substitute the values

Here, the annual adjusted earnings are $42,986.35 and the Medicare tax rate is 2.9% or 0.029 in decimal form. So we calculate $42,986.35 × 0.029.
$$42986.35\times0.029 = 1246.60415$$

Step3: Round to the nearest cent

Rounding 1246.60415 to the nearest cent (two decimal places) gives 1246.60.

Answer:

Tim's Medicare tax is $\boldsymbol{1246.60}$.