Kyle, a single taxpayer, worked as a free-lance software engineer for the first
ID: 2579972 • Letter: K
Question
Kyle, a single taxpayer, worked as a free-lance software engineer for the first three months of 2017. During that time, he earned $84,000 of self-employment income. On April 1, 2017, Kyle took a job as a full-time software engineer with one of his former clients, Hoogle Inc. From April through the end of the year, Kyle earned $174,000 in salary. What amount of FICA taxes (self-employment and employment related) does Kyle owe for the year? (Round your intermediate calculations to the nearest whole dollar amount.)
Self-employment/FICA taxExplanation / Answer
The self employment tax is 15.3%
In case a person has both self employment income and employement income, he needs to pay income tax on both incomes. Employer of the person must collect taxes from his wages.
Total self-employment tax of 2,250 is comprised of 0 Social Security tax and 2,250 Medicare tax. The tax-deductible portion for Form 1040 is 1,125.
Self-Employment Tax Analysis
Social Security
Medicare
'Adjusted' earnings
$0
$84,000
Less: self-employment adjustment
$0
$6,426
Taxable self-employment earnings
$0
$77,574
Self-employment tax
$0
$2,250
Total self-employment tax
$2,250
Tax-deductible portion
$1,125
Self-Employment Tax Analysis
Social Security
Medicare
'Adjusted' earnings
$0
$84,000
Less: self-employment adjustment
$0
$6,426
Taxable self-employment earnings
$0
$77,574
Self-employment tax
$0
$2,250
Total self-employment tax
$2,250
Tax-deductible portion
$1,125
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