Question

The self-employment tax rate is made up of the Social Security portion, which is ____, and the Medicare portion, which is ___.

1.45%; 7.65%.

12.4%; 2.9%.

6.2%; 7.65%.

1.45%; 6.2%.

A refundable tax credit is one that:

may result in the federal government giving money back in excess of taxes paid.

always results in your tax liability being eliminated.

may result in a negative effective tax rate.

both may result in the federal government giving money back in excess of taxes paid and may result in a negative effective tax rate.

Answer 1

Question 1

Answer:- 12.4%; 2.9%

Reason:- The self-employment tax rate is 15.3% which can be bifurcated into 12.4% of Social Security portion and 2.9% of Medicare portion.

Question 2

Answer:- both may result in the federal government giving money back in excess of taxes paid and may result in a negative effective tax rate.

Reason:- When the tax credits (refundable) are higher than tax liability, the tax liability becomes negative, so the difference will be paid to the taxpayer by the IRS.