An employee earned $1,000 in the first pay period of the current year. How much is the total employer and employee social security taxes on these earnings? (Use the simplified rate shown in illustrations.)

$120

Explanation:

The total employer and employee social security taxes is 6% fir the employee and 6% for the employee which then makes up 12%.

Since the employee earned $1,000 in the first pay period of the current year, then the total employer and employee social security taxes on these earnings will be:

= 12% × $1000

= 0.12 × $1000

= $120