olve the problem using $6\mathrm{.}2\%,$ up to $$128,400$ for Social Security tax and using $1\mathrm{.}45\%,$ no wage limit$,$ for Medicare tax.

What are the social security and Medicare withholdings for an executive whose annual gross earnings are $$132,500?$

Step $1$

The amount of money withheld from the annual gross earnings is the product of the gross earnings and the tax rate expressed as a decimal. Even though the executive has annual gross earnings of $$132,500,$ social security will only be taxed on a maximum of $$128,400.$ The tax rate for social security is $6\mathrm{.}2\%.$

Find the amount of money withheld due to social security.

social security withholdings$=$earnings subject to tax $$ tax rate$=0\mathrm{.}062=$$