Question

Which two sections of the IRC would you use to determine the self-employment tax rate for an individual who earned $100,000 in self-employment income?

How much self-employment tax would be due from a taxpayer who earned $399 in self-employment income? Enter only numbers, no dollar signs or commas and round to the nearest dollar (e.g. if the your answer is $61.05 then enter 61 in the blank)?

Answer 1

PART 1

Following two section deals with self employment tax rates

section 1401(a)

section 1401(b)

Total tax rate =15.3%

which comprises of

12.4% social security tax under section 1401(a)

2.90% medicare tax under section 1401 (b)

PART2

Calculation of self employment tax

self employment tax will be levied if and only if individual is having income from self employment at least of $ 400

Now we can calculate (only to the extent of 92.35 % is liable remaining is exempt.

income reported $399 (social security portion ) ( medicare portion)

total income $399 $399

less deduction @7.65% ( $31) ( $31)

Taxable self employment earnings $368    $368

self employment tax       0 0

Here earnings are less than $400 so the self employemnt tax is NIL in case of part person earning$ 399