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In 2018, Miranda records net earnings from self-employment of $146,000. She has no other income. Determine...

In 2018, Miranda records net earnings from self-employment of $146,000. She has no other income. Determine the amount of Miranda’s self-employment tax and her for AGI income tax deduction.

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Answer #1
Answer:
Net earnings from self-employment = $146,000
Self-employment income subject to self-employment taxes = $146,000 * 92.35% = $134,831
Self-employment tax for 2018:
Income up to $128,400.00 is subject to FICA taxes (12.4%) = $128,400 * 12.4% = $15,921.60
Medicare tax (2.9%) on income of $134,831 = $134,831 * 2.9% = $3,910.10
Total self-employment taxes for 2018 = $15,921.60+ $3,910.10 = $19831.70 = $19,832
The taxpayer is allowed a deduction for AGI of one-half of the self-employment tax
= $19831.70 * 50% = $9,915.85 = $9,916
Miranda's self-employment tax is $19,832 and she has a $9916 deduction for AGI
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