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. tims fica tax is $\square$. (round to the nearest cent.)

Explanation:

Step1: Calculate total tax rate

First, we need to find the total tax rate by adding the FICA rate and the Medicare rate. The FICA rate is 12.4% and the Medicare rate is 2.9%. So the total tax rate is \(12.4\% + 2.9\% = 15.3\%\). To use this in a calculation, we convert the percentage to a decimal by dividing by 100, so \(15.3\% = \frac{15.3}{100}=0.153\).

Step2: Calculate total tax amount

We know the annual adjusted earnings (let's call this \(E\)) is \(\$42,986.35\). To find the total tax amount (\(T\)), we multiply the earnings by the total tax rate (in decimal form). So the formula is \(T = E\times\text{total tax rate (decimal)}\). Substituting the values, we get \(T = 42986.35\times0.153\).

Calculating this: \(42986.35\times0.153 = 42986.35\times(0.1 + 0.05 + 0.003)=42986.35\times0.1+42986.35\times0.05 + 42986.35\times0.003 = 4298.635+2149.3175 + 128.95905 = 4298.635+2149.3175=6447.9525+128.95905 = 6576.91155\).

Rounding this to the nearest cent (two decimal places), we look at the third decimal place, which is 1. Since 1 < 5, we round down, so the amount is \(\$6576.91\).

Answer:

\(6576.91\)