Question

Tax Drill - Self-Employment Tax

In 2019, Miranda records net earnings from self-employment of $146,000. She has no other 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.

Answer 1

The AGI deduction for Single Income tax filer is $12200.

The Tax Rate for Self Employment earnings are as follows:

First $132900 tax rate would be 12.4% for Social Security portion and 2.9 % for Medicare.

After $132900 only 2.9% for Medicare is applicable.

In the above given case self employment tax would be:

$146000-$12200 (AGI Deduction)= $133800

on $133800, $132900 would be taxed at 12.4% & 2.9% which comes out to be =$132900*15.3%= $20333.70

and remaining $900 ($133800-$132900) would be taxed at 2.9% = $900 *2.9%=$26.10

Total Tax Payable =$20333.70+$26.10= $20359.80

Total AGI Deduction =$12200.