Kyle, a single taxpayer, worked as a free-lance software engineer for the first
ID: 2568283 • 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 $44,000 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 $178,000 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.)
Explanation / Answer
The amount of FICA tax is calculated with the use of following table:
Answer is $11,813.
Step Description Amount Formula 1 Social Security Tax [(Lesser of Wages of $178,000 or 127,200)*6.2%] 7,886 127,200*6.2% 2 Social Security Wage Base Limit Less Employee Compensation Subject to Social Security Tax 0 118,500 - 118,500 3 Net Earnings from Self-Employment 40,634 44,000*(100% - 7.65%) 4 Social Security Portion of Self-Employment Tax [(Lesser of Step 2 Amount or Step 3 Amount)*12.4%] 0 0*12.4% 5 Employer Portion of Medicare Tax for Self Employment Tax Purposes (Step 3 Amount*1.45%) 589 40,634*1.45% 6 Total of Taxpayers Compensation and Net Earnings from Self-Employment (178,000 + Step 3 Amount) 2,18,634 178,000 + 40,634 7 Lesser of [Step 6 Amount or $200,000 ]*1.45% 2,900 200,000*1.45% 8 Greater of [0 or (Step 6 Amount - $200,000)]*2.35% 438 (218,634 - 200,000)*2.35% 9 Employee Portion of Medicare Tax (Step 7 Amount + Step 8 Amount) 3,338 2,900 + 438 Total Amount of FICA Tax Owed for the Year (Step 1 Amount + Step 4 Amount + Step 5 Amount + Step 9 Amount) $11,813 7,886 + 0 + 589 + 3,338Related Questions
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