Question

In 2018, Miranda records net earnings from self-employment of $235,500. She has no other income. Determine...

In 2018, Miranda records net earnings from self-employment of $235,500. She has no other income. Determine the amount of Miranda's self-employment tax and her for AGI income tax deduction.

In your computations round all amounts to two decimal places. Round your final answers to the nearest dollar.

Miranda's self-employment tax is _________________  and she has a $_____________________ deduction for AGI.

Homework Answers

Answer #1

solution :
given that
In 2018, Miranda records net earnings from self-employment of $235,500.
She has no other income.
Determination the amount of Miranda's self-employment tax and her for AGI income tax deduction :
NET EARNINGS FROM SELF-EMPLOYMENT $235000

92.35 PERCENT OF NET EARNINGS 217022.5

MEDICARE [email protected]% ON $217022.5= 6293.65

Income up to $128,400.00 is subject to FICA taxes (12.4%) = $128,400 * 12.4% = $15,921.60

Total self-employment taxes for 2018 = $15,921.60+ $6293.65 = $22214

The taxpayer is allowed a deduction for AGI of one-half of the self-employment tax

= $22214 * 50% = $10,613.50 = $11107
Therefore
Miranda's self-employment tax is $22214 and she has a $11107 deduction for AGI

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