Ralph Henwood was paid a salary of $73,400 during 20-- by Odesto Company. In add

Question

Ralph Henwood was paid a salary of $73,400 during 20-- by Odesto Company. In addition, during the year Henwood started his own business as a public accountant and reported a net business income of $50,000 on his income tax return for 20--. Compute the following: a. The amount of FICA taxes that was withheld from his earnings during 2010 by Odesto Company: OASDI: $_______________ HI: $_________________ b. Henwoods self-employment taxes on the income derived from the public accounting business for 2010: OASDI: $_______________ HI: $__________________

Explanation / Answer

a). Solution :- OASDI = 73400 * 6.20 %

= $ 4550.80

HI = 73400 * 1.45 %

= $ 1064.30

Conclusion :-

b). Solution :-

OASDI = (106800 - 73400) * 12.40 %

= 33400 * 12.40 %

= $ 4141.60

HI = 50000 * 2.90 %

= $ 1450

Conclusion :-

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