Rose and Jerry Smith live in Fremont and are both employees for local firms. Ros
ID: 2455663 • Letter: R
Question
Rose and Jerry Smith live in Fremont and are both employees for local firms. Rose has a job that she earns $ 200,000 (all of both Rose’s and Jerry’s earnings are fully subject to social security, medicare, state and federal income tax) at, and another job at which she earns $ 250,000. Jerry has one job, and earns $ 300,000 at it. Rose also has a substantial corporate bond portfolio and earns (receives) $ 56,000 at it annually (and 2014 was a normal year as to the couple’s wages and other earnings), but she pays $ 2,000 annually to her investment advisor/broker for the advice/commissions.
Both Rose’s and Jerry’s employers withheld the proper amounts for social security taxes on wages, and all medicare taxes on all wages, but the only other withholding that their employer’s withheld for was state and basic federal income taxes (Ms. Smith’s employer’s do not even know about her bondholdings). There was no withholding of any kind from Ms. Smith’s interest income.
How much of a “social security amount due or refund” AND “total medicare amount due or refund” are the Smith’s needing to pay/receive?
Explanation / Answer
Roses Earnings Job1 Job2 Total Earnings from local firm 200000 250000 450000 Medicare Taxes 2900 3625 6525 Withhold tax deducted 0 450 450 Total Medicare Tax paid 2900 4075 6975 Actual Amount of Medicare Tax 2900 3625 6525 Withhold tax be deducted 2250 Total need to be deducted 8775 Additional withhold tax to be paid = 8775 - 6975 = 1800 Social security Tax paid 7347 7347 14694 Employer contribution 7347 7347 14694 Total social security Tax 14694 14694 29388 Amount need to be deducted 14694 Refund Amount 14694 Other income (56000-2000) 54000 Medicare tax due @1.45% 783 Additional withhold tax payable 486 Additional medicare tax payable 1269 Answer: Additional Medicare tax payable = 1800 + 1269 = $3,069 Social security tax refundable = $14,694.
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