Martha is self-employed in 2015.Her business profits are $140,000.What is her self-employment tax?
A)$21,420
B)$18,754
C)$18,130
D)None of the above.

Question

Quizplus · Accepted Answer

The self-employment tax rate in 2015 is 15.3%. The Social Security portion (12.4%) applies to the first $118,500, and the Medicare portion (2.9%) applies to the entire income. Therefore, the tax is (12.4% of $118,500) + (2.9% of $140,000) = $14,694 + $4,060 = $18,754.

Martha Is Self-Employed in 2015