Question

What is the maximum deductible contribution to a defined contribution qualified pension plan on behalf of Ann, a self-employed individual whose income from self-employment is $25,000 and whose Social Security taxes are $3,532 in 2016?

Answer 1

The Self employed take cure comprised of two parts second secondary and Medicare. If you are self employed undivided your sound serunhyrele is 12.4% and your Medicare tax is 2.9 percent on these same amounts of earner but deduct the employer torture   

Here earner’s = $25000

Amtsupyech to      

Self employment tax = 92.35% of your net earnings from self embayment

Your net new earners =25000*92.35% =$23087.5

Your Social Security tax = $23087.5 * 12.4% = $2863

And your Medicare tax = 23087.5 * 2.9%= $670

Social Security taxes = 2863 + 670 = $3532

As per see 1040 white fvgvng you can deduct one –half of the self employment tax for tax deduction portion

The maximum deductible contribution for arm, a self employed individual = 3532 *1/2 =$1766