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.
