Question

Married taxpayers Otto and Ruth are both self-employed and file a joint return. Otto earns $435,200 of self-employment income and Ruth has a self-employment loss of $23,100. How much 0.9 percent Medicare tax for high-income taxpayers will Otto and Ruth have to pay with their 2020 income tax return?

Answer 1

Answer: $1,458.90

Explanation:

As they are filing together, the first step would be to find out the taxable income after accounting for Ruth's loss.

Total taxable income = Otto's earnings - Ruth's loss

= 435,200 - 23,100

= $412,100

There is an additional 0.9% Medicare tax on the amount that people file that is above $250,000 when they file jointly and are married..

The additional Medicare will be:

= (412,100 - 250,000) * 0.9%

= $1,458.90