Question

Alice is single and self-employed in 2020. Her net business profit on her Schedule C for the year is $170,000. What is her self-employment tax liability and additional Medicare tax liability for 2020? (Round your final answer to the nearest whole dollar amount. Leave no answer blank. Enter zero if applicable.) Self-employment tax liability Additional medicare tax liability

all 1 question

Answer 1

1. ALICE TAX LIABILITY :-

Net Business Profit is $ 1,70,000

Self Employment tax is 15.3 % = $ 1,70,000 * 15.3 % = $ 26,010

Additional Medicare Tax is 0.9 % on income above $ 2,00,000. As the income is below $ 2,00,000, there will be no additional medicare tax.

2. RASHEED TAX LIABILITY :-

Salary Income is $ 4,31,000

FICA Tax on salary income is 7.65% = $ 4,31,000 * 7.65% = $ 32,972

Additional Medicare Tax is 0.9% = $ 2,31,000 * 0.9% = $ 2,079

3. CAROL STATE UNEMPLOYED TAX CREDIT :-

Income earned from ABC Company is $ 72,000

FUTA Tax rate is 0.8% = $ 72,000 * 0.8% = $ 576

4. EVE TAX LIABILITY :-

Compensation Payments = $ 55,000

Business Expenses = $ 7,000

Standard EDeduction = $ 12,400 ( As Eve is Single )

Taxable income = $ 42,600 ( $ 55,000 - $ 12,400)

Tax = $ 42,600 * 15.3 % = $ 53,103