Question

Problem #7 Shanita is a self-employed event planner. She has net earnings (profit) from her business of $63,220. Her self-employment taxes for the year are? (Show Your work!)

Problem #8 Venkat is age 32, single, and reported AGI of $67,000 in tax year 2019. He is an active participant in his employer's pension plan. What is the maximum deductible IRA contribution he can make in 2019? (Show your work!)

Answer 1

Solution

1. Self employment tax of net self employment earnings subjects to self employment taxes =15.3%

Income subject to self employment taxes of profit from business =92.35%

92.35% of profit from business =$63,220*92.35%

=$58,383.67

Self employment tax= $58,383.67*15.3%

=$8932.70

2.

For upto income of $64,000. The maximum deduction is $6,000 for IRA contribution linked to an active pension. Deduction of income of $67,000 is $1800(increase of $600 phase out for increase of every $1000)

So answer is $1800.