You used to earn $76,000 a year in your old job! Suppose you return to college and earn an MBA, after which you get an upper-management position with Yum! Brands. If the tax rates are the same as in 2012 and your starting salary is $125,000, how much will you owe in federal social insurance taxes?

Federal social insurance taxes include OASDI taxes (Social Security) and Medicare taxes. Currently. In 2012, the Social Security tax limit was $110,100, while their was no limit on Medicare.

The Social Security tax rate was temporarily reduced during 2011 and 2012 from 6.2% to 4.2%, so your Social Security tax withholdings were $4,624.20 in 2012.

Medicare taxes did not change in 2012 and were 1.45%, so your Medicare tax withholding were $1,812.50 in 2012.  

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