Question

Jane is a self-employed attorney. This year, her net profit exceeded $350,000, which put her in the 37 percent tax bracket. Early in the year, Jane hired Ben as a paralegal and paid him a $33,000 salary.

1. Compute the employer payroll tax on Ben’s salary.
2. In addition to the employer payroll tax, Jane paid $400 unemployment tax on Ben’s salary. The salary and tax expense reduced Jane’s net earnings from self-employment, thereby saving $962 in self-employment tax. Compute Jane’s after-tax cost of hiring Ben.

Answer 1

e solution Given cita serie from the above question . Jane is a self-employed attorney. Net profit eaceeded $ 350.000 put her in the 37% tax bracket. paid $33,000 salary, Let a) local secosity tere = $33,000X6.2% for =12,046 Medicare tax = $33,000 X 1.45% Employer paysoll tax on Ben's Salary b) Salary payment to Benz 33,000. Employez payoolt tan on Salary = 2825 Lunemployment faire = 400* Jane's before tax cost of salary / tax : payment=85925 Income dan Savings from deduction -.35925737% -115292623)

Reduction in Jane's SE clas deduction 1 962 Income tax cost of recluced 50% SE tax (481 437%) Net tare Savings from SE tax reduction 784 Jane's after tax cost of hising Ben. $21,849) Ucun