Question

Carl is a self-employed real estate agent. For the current year, his self-employment net earnings (revenues minus expenses) are $80,000. He is also employed as an accountant with a gross salary of $70,000 for the year. Assume that the appropriate social security income ceiling for the year is $130,000 and that the self-employed FICA rates are 12.4% for social security and 2.9% for Medicare. What is Carl s self-employment tax liability for the year

Answer 1

Answer:

$12,240

Explanation:

Social security Tax = $80,000 x 12.4%

Social security Tax = $9,920

Medicare Tax = $80,0000 x 2.9%

Medicare Tax =  $2,320

Total tax = $9,920 + $2,320

Total tax = $12,240