Sam has $80,000 of net income from his sole proprietorship in 2018. What is his deduction for AGI for self-employment taxes?
A) $9,826
B) $6,120
C) $5,652
D) $4,913

Question

Quizplus · Accepted Answer

The self-employment tax rate is 15.3%, and only 92.35% of net income is subject to this tax. The deduction for AGI is half of the self-employment tax paid. Calculation: $80,000 * 92.35% = $73,880. Self-employment tax = $73,880 * 15.3% = $11,304. Deduction for AGI = $11,304 / 2 = $5,652.

Sam Has $80,000 of Net Income from His Sole Proprietorship