A. Dawn's gross monthly pay is $4,000 ($48,000/12).
B. The month that Dawn hit her maximum taxable Social Security Income is May (5 months from January to May).
C. In February, 1978, Dawn paid $260 in Social Security Tax.
D. In May, 1978, Dawn paid $110.50 in Social Security Tax, which represented the balance.
E. In November, 1978, Dawn paid $0 in Social Security Tax because by May she had completely paid the maximum Social Security Tax of $1,150.50.
Data and Calculations:
Gross earnings in 1990 = $48,000
Maximum taxable income in 1990 = $17,700
Social Security Tax Rate = 6.5%
Gross monthly pay = $4,000 ($48,000/12)
Monthly Social Security Tax = $260 ($4,000 x 6.5%)
Total Social Security Tax = $1,150.50 ($17,700 x 6.5%)
In 5 months, Dawn would have paid a total of $1,150.50 ($260 x 4 + $110.50) in Social Security Tax.
Thus, the total Social Security Tax paid by Dawn in that year was $1,150.50.
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