Question

which of the following statements explains the relationship between social security and medicare taxes?
a. both social security and medicare are applied to all wages up to the maximum taxable earnings.
b. both social security and medicare are applied to all wages without limit.
c. medicare is applied to all wages up to the maximum taxable earnings. social security is applied to all wages without limit.
d. social security is applied to all wages up to the maximum taxable earnings. medicare is applied to all wages without limit.

please select the best answer from the choices provided

○ a
○ b
○ c
○ d

Explanation:

To determine the correct answer, we analyze the tax rules for Social Security and Medicare:

• Social Security tax has a maximum taxable earnings limit (it is only applied to wages up to this limit).
• Medicare tax does not have a wage limit (it is applied to all wages, regardless of amount).

Now we evaluate each option:

• Option a: Incorrect, as Medicare has no wage limit.
• Option b: Incorrect, as Social Security has a wage limit.
• Option c: Incorrect, as it reverses the rules for Social Security and Medicare.
• Option d: Correct, as it accurately states that Social Security is applied up to the maximum taxable earnings and Medicare is applied to all wages without limit.

Answer:

d. Social Security is applied to all wages up to the maximum taxable earnings. Medicare is applied to all wages without limit.