Question

Samir is a self-employed marketing consultant. He had no income from January through March 2020. His April through December 2020 income subject to SE tax is $55,000.
Samir's SE tax for 2020 is $7,771 [$55,000 x 0.9235 x 0.153 = $7,771]. Samir may reduce his estimated tax payments by how much?

Answer 1

Answer:

Step-by-step explanation:

Since he is his own boss, he is basically a self employed taxpayer and should be to deduct the employer portion of self employment taxes that he/she pays during the year.

In a case like this, the total self employment taxes are $7,771 x 50% = $7,771 * 0.5 = $3,885.50. This money also now, is corresponding to employer taxes (the other 50% are not deductible since they correspond to employee taxes).

Self employment taxes composes but not limited to Medicare and Social Security taxes (FICA taxes basically).