Question

2014 Tax shedule:

Eva received $60,000 in compensation payments from JAZZ Corp. during 2014. Eva incurred $5,000 in business expenses relating to her work for JAZZ Corp. JAZZ did not reimburse Eva for any of these expenses. Eva is single and she deducts a standard deduction of $6,200 and a personal exemption of $3,950. Based on these facts answer the following questions: Use Tax rate schedule.

a

Assume that Eva is considered to be an employee. What amount of FICA taxes is she required to pay for the year?

Amount of FICA Taxes___

b.	Assume that Eva is considered to be an employee. What is her regular income tax liability for the year? (Round your answer to 2 decimal places.)

Regular tax Liability____?
  

c.	Assume that Eva is considered to be a self-employed contractor. What is her self-employment tax liability for the year? (Round your intermediate and final answer to the nearest whole dollar amount.)

Self employment tax liability_____?
        

d.	Assume that Eva is considered to be a self-employed contractor. What is her regular tax liability for the year? (Round your answer to 2 decimal places.)

Regular tax Liability_____-?

Answer 1

Part A

Amount of FICA Taxes = 60000*7.65% = 4590

Part B

Taxable income = salary - standard deduction - personal exemption = 60000-6200-3950= 49850

Regular tax liability =6570 (1815+15%*(49850-18150))

Part C

Net self employment income = gross self employment compensation - business expenses = 60000-5000= 55000

Earnings from self employment = net self employment income * percentage self employment income subject to self employment tax = 55000*93.25% = 50793

Self employment tax liability = earnings from self employment * self employment tax rate = 50793*15.3% = 7771

Part D

Net self employment income = 55000

AGI deduction for employer portion of self-employment taxes = 3,886 (50,793 * 7.65%)

AGI =55000-3886 = 51,114

Taxable income = AGI - standard deduction - personal exemption = 51114-6200-3950 = 40964

Regular tax liability = 5237.10 = 1815+(15%*(40964-18150))