Question

# In 2018, Miranda records net earnings from self-employment of \$146,000. She reports no other gross income....

In 2018, Miranda records net earnings from self-employment of \$146,000. She reports no other gross income. Determine the amount of Miranda's self-employment tax and her for AGI income tax deduction. In your computations round all amounts to two decimal places. Round your final answers to the nearest dollar. Miranda's self-employment tax is \$_____ and she has a \$_____ deduction for AGI

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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