Amber has wages of $90,000 and net income from a small unincorporated business o

Question

Amber has wages of $90,000 and net income from a small unincorporated business of $20,000 for 2017 (Click on the icon to view the self-employment tax rate table.) Requirements a. What is the amount of Amber's self-employment (SE) tax and deduction for AGl for her SE tax? b. How would your answer to Part a change if Amber's wages were $160,000 rather than $90,000? Requirement a. What is the amount of Amber's self-employment (SE) tax and deduction for AGI for her SE tax? Begin by completing the table below to show Amber's SE tax for 2017 and then enter her deduction for AGI for her SE tax. (Round all currency amounts to the nearest whole dollar. Abbreviations used: OASDIold-age, survivors, and disability insurance; Hl- hospital insurance [Medicare].) 2017 SE tax for OASDI Reference SE tax for H Total SE tax Self-Employment Tax - 2017 Category Rate 12.4% 2.90 % Dollar Limit OASDI $127,200 First $200,000 of self-employment income ($250,000 combined self employment income fo joint returns) Self-employment income greater than $200,000 ($250,000 for joint returns) Medicare 380 % Enter any number in the edit fields and then

Explanation / Answer

Net Self Employed Income is 92.35% of $ 20000 = $ 18470

Medicare Tax = $ 2.90% of $ 18470 = $ 535.63

social security tax = 12.40% of $ 18470 = $ 2290.28

SE tax = 535.63+2290.27 = $ 2825.90

Deduction for SE tax = $ 1412.95

PArt B

In that case, there would be zero social security tax because wages exceeds the basic limit.

Self employed tax will include only medicare tax of $ 535.63 and deduction would be of $ 267.81

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