Question

In 2020, Miranda records net earnings from self-employment of $193,800. 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.

Answer 1

Answer:

the self employment tax on 92.35% of your net income as self employed by 15.3% = $193,800 x 92.35% = $178,974.30

Miranda will pay social security (OASDI) taxes for the first $137,700 = $137,700 x 6.2% x 2 = $17,074.80

Her Medicare taxes will be calculated using $178,974.30 x 1.45% x 2 = $5,190.25

total self employment taxes = $17,074.80 + $5,190.25 = $22,265.05

Miranda can deduct 50% of her self employment taxes from her AGI = $22,265 x 50% = $11,132.50 ≈ $11,133