Question

Subject Tax Accounting

Kyle a single taxpayer worked as a free-lance software engineer for the first three months of 2018. During that time, he earned $44,000 of self-employment income. On April 1, 2018, Kyle took a job as a full-time software engineer with one of his former clients, Hoogle Inc. From April through the end of the year, Kyle earned $178,000 in salary. What amount of FICA taxes (self-employment and employment related) does Kyle owe for the year?

Answer 1

Computation of FICA Tax for Self Employment

Self employment income = $ 44000

FICA Tax for Self Emplyment = $ 6217
(44000 - 7.65% * 15.3%)

Computation of FICA Tax for employment

Salary earned = $ 178000.00
Social Security (128700 * 6.2%) = $ 7979.40
Medicare ( 178000 * 1.45%) = $ 2581.00
Total = $ 10560.40

Therefore total tax owe for the year by Kyle = $ 16777.40
( 6217 + 10560.40)

Note:
* Employer pays an equal amount i.e, $ 10560.40 and deducts it as a business expense.