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For 2019, Roberta is a self-employed truck driver with earnings of $47,000 from her business. During the year, Roberta received $2,500 in interest income and dividends of $500. She also sold investment property and recognized a $1,500 gain. What is the amount of Roberta's self-employment tax (Social Security and Medicare taxes) liability for 2019?

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jepessoa

Answer:

$6,641

Explanation:

Roberta must pay self-employment taxes from the income she received from her truck driving business ($47,000). Self-employment taxes are similar to the taxes paid by the employers (FICA) and are subject to he same maximums.

  • social security tax 12.4%
  • medicare tax 2.9%

Since the self-employed are allowed certain tax deductions, the easiest way to determine taxable income is by multiplying income x 92.35%.

Taxable income = $47,000 x 92.35% = $43,404.50

  • Social security taxes = 12.4% x $43,404.50 = $5,382
  • Medicare taxes = 2.9% x $43,404.50 = $1,259
  • total $6,641

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