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What is an independent contractor's yearly contribution to the U.S. Social Security tax on an income of [tex] \[tex]$40,000 [/tex] per year?

\begin{tabular}{|c|c|c|}
\hline \multicolumn{3}{|c|}{ FICA Taxes } \\
\hline & Social Security & Medicare \\
\hline Total Due: & [tex] 12.40\% [/tex] & [tex] 2.90\% [/tex] \\
\hline \begin{tabular}{l}
Employer's \\
Responsibility
\end{tabular} & [tex] 6.20\% [/tex] & [tex] 1.45\% [/tex] \\
\hline \begin{tabular}{l}
Employee's \\
Responsibility
\end{tabular} & [tex] 6.20\% [/tex] & [tex] 1.45\% [/tex] \\
\hline
\end{tabular}

$[/tex]
\[tex]$[?]
$[/tex]



Answer :

GinnyAnswer
To determine an independent contractor's yearly contribution to the U.S. Social Security tax on an income of [tex]$40,000 per year, we need to know the total Social Security tax rate applicable to them. Social Security tax covers a total of 12.4%, both parts as follows: - Employer's responsibility: 6.2% - Employee's responsibility: 6.2% Since an independent contractor is responsible for the entire Social Security tax, we add both parts: \[ 6.2\% + 6.2\% = 12.4\% \] Next, we need to calculate 12.4% of their annual income. Given: - Annual income = $[/tex]40,000
- Social Security tax rate = 12.4%

To calculate the contribution:

[tex]\[ \text{Social Security contribution} = 0.124 \times 40,000 = 4960 \][/tex]

Therefore, the yearly contribution to the U.S. Social Security tax on an income of [tex]$40,000 per year is $[/tex]4960.0.

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