In 2017, an employee earned wages of 38,000, 47,000, and 50,000 from three employers. What is the total Social Security and Medicare tax withheld from all wages?

• A. 9,065.25
• B. 9,843.90
• C. 9,730.80
• D. 10,327.50

Answer: (D)

Social Security tax is 6.2% but only on wages up to the annual wage base, while Medicare tax is 1.45% on all wages with no cap. For 2017, the wage base is 127,200. The employee earned a total of 38,000 + 47,000 + 50,000 = 135,000.

Social Security tax: 127,200 × 0.062 = 7,886.40 (this is the maximum Social Security tax for the year, regardless of how many employers you have).

Medicare tax: 135,000 × 0.0145 = 1,957.50.

Total Social Security and Medicare tax withheld: 7,886.40 + 1,957.50 = 9,843.90.

If you multiplied 6.2% by each individual wage and summed, you’d get a higher number for Social Security (because that ignores the cap), yielding 10,327.50 total. The correct approach accounts for the annual Social Security wage base, so the total is 9,843.90.