Question

In 2020, Miranda records net earnings from self-employment of $158,500. She has no other gross income. Determine the amount of Miranda's self-employment tax and her for AGI income tax deduction. In your computations round all amounts to two decimal places. Round your final answers to the nearest dollar. Miranda's self-employment tax is $fill in the blank 1 and sh

Answer 1

Answer:

Miranda's self-employment tax = $21,320

AGI income tax deduction = $10,660

Explanation:

Particulars                                                    Amount

Net Earnings from Self Employment          $158,500

Taxable Self employment Earnings           $146,374.75

(158,500*92.35%)

Social Security Tax ($137,700*12.4%)         $17,074.80

Medicare Tax ($146,375*2.9%)                   $4,244.88

Self employment Tax = Social Security tax + Medicare tax

Self employment Tax = $17,074.80 + $4,244.88

Self employment Tax = 21,320

Taxpayer are allowed a deduction for AGI of 50% of self-employment tax.

= $21,320*50%

= $10,660