Virginia Contractor General Practice Test

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Prepare for the Virginia Contractor General Test with confidence. Our comprehensive quizzes feature multiple-choice questions with hints and detailed explanations. Equip yourself for success in obtaining your contractor license.

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What percentage is deducted for Medicare from earnings?

1.25%
1.45%
2.5%
3.5%

The correct answer is: 1.45%

The percentage deducted for Medicare from earnings is 1.45%. This rate applies to all wages earned in the United States and is part of the Federal Insurance Contributions Act (FICA) tax, which also includes Social Security taxes. The funds collected from Medicare taxes are used to provide health insurance for individuals aged 65 and older, as well as certain younger individuals with disabilities. It's important for contractors and employers to be aware of this deduction because it directly affects payroll calculations and overall employee compensation. Understanding the correct Medicare tax percentage helps ensure compliance with federal tax laws and accurate reporting to the IRS. Employers are responsible for withholding this amount from employees' paychecks and matching it, contributing an additional 1.45% on behalf of their workers, which is crucial for maintaining the integrity of the Medicare program.