Tax Drill Self-Employment Tax In 2017, Miranda records net earnings from self-em

Question

Tax Drill Self-Employment Tax In 2017, Miranda records net earnings from self-employment of $146,000. She has no other income. In your computations round all amounts to two decimal places. Round your final answers to the nearest dollar. Miranda's self-employment tax is 134,831 X and she has a 9,227 X deduction for AGI Feechack Cheak My Work The tax on self-employment income is levied to provide Social Security and Medicare benefits (old age, survivors, and disability insurance and hospital insurance) for self-employed individuals.

Explanation / Answer

Self-employment tax for 2017 6.2%*2*127200= 15772.8 1.45%*2*146000= 4234 20006.8 Deductions for AGI 10003.4 Exactly 1/2 of the self-employment tax, ie. 20006.8/2=10003.4 can be deducted to arrive at the adjusted gross income (AGI) on Form 1040

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