Practice Quiz

Financial Planner

Category - Retirement Savings and Income Planning

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Your client is currently taxed for FICA at 7.65 percent; however, they are considering opening their own business. What would be the new tax rate for FICA?
  1. There is no change for FICA as an employee or as self-employed.
  2. 32.1 Percent.
  3. 15.3 Percent.
  4. None of the above.
Explanation
Answer: C - FICA for employees are 7.65 percent, those who are self-employed have a FICA rate of 15.3 percent. This is a combination of 12.40 percent Social Security tax and 2.9 percent Medicare tax.
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