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

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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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