Question

Alice is single and self-employed in 2018. Her net business profit on her Schedule C for the year is $140,000. What is her self-employment tax liability and additional Medicare tax liability for 2018?

A. What is her self-employment tax liability?

B. What is her additional Medicare Tax Liability?

Answer 1

A

Self-employment tax:

Particulars	Amount
Taxable earnings(92.35%)	129,290
Social security on income upto 128,400	15,921.60
Medicare tax on 129,290	3,749.41
Total self-employment taxes	19,671.01

Social security is payable on earnings up to 128,400 at 12.4% and medicare tax is 2.9% of all income.

B

Additional medicare tax payable is $0 as net income is below threshold applicable of $200,000