Question

Required information [The following information applies to the questions displayed below.] Eva received $60,000 in compensation payments from JAZZ Corp. during 2018. Eva incurred $5,000 in business expenses relating to her work for JAZZ Corp. JAZZ did not reimburse Eva for any of these expenses. Eva is single and she deducts a standard deduction of $12,000. Based on these facts answer the following questions: Use Tax Rate Schedule for reference.

d. Assume that Eva is considered to be a self-employed contractor. What is her regular tax liability for the year? (Round your intermediate computations to the nearest whole dollar amount and round your final answer to 2 decimal places.)

Answer 1

Description	Amount	Explanation
(1) Gross self-employment compensation	$60,000
(2) Business expenses	(5,000)
(3) Net self-employment (Schedule C) income	$55,000	(1) + (2)
(4) For AGI deduction for employer portion of self-employment taxes	(3,886)	$50,793 × 7.65= $3,886
(5) AGI	$51,114	(3) - (4)
(6) Standard deduction	(12000)
Taxable income	$39,114	(5) - (6)
Regular tax liability	$4,544.58	(39,114 – 38,700) × 22% + 4453.5 [see tax rate schedule for Single individuals for 2018]