Joan earns $119,900 in her job as a physician's assistant.She also has her own business selling cosmetics.This business generated $15,000 of earnings.What is Joan's self-employment tax for 2019?

Question

Quizplus · Accepted Answer

Joan's self-employment tax can be calculated using Schedule SE (Form 1040), which is used to calculate social security and Medicare tax for self-employed individuals.

To calculate the self-employment tax, we first need to calculate the net earnings from self-employment:
Net earnings = Business earnings - Business expenses - 1/2 of self-employment tax

We are not given any information about Joan's business expenses or the amount of self-employment tax, so we will assume that there are no business expenses and calculate the self-employment tax separately.

Net earnings = $15,000 - 0 - 1/2 of self-employment tax

Simplifying the equation:

1/2 of self-employment tax = $15,000 - Net earnings 
1/2 of self-employment tax = $15,000 - ($119,900 - $15,000) 
1/2 of self-employment tax = $15,000 - $104,900 
1/2 of self-employment tax = $10,050

Now we can calculate the self-employment tax:

Self-employment tax = 2 * (1/2 of self-employment tax) * 0.153 
Self-employment tax = 2 * $10,050 * 0.153 
Self-employment tax = $3,078.30

Therefore, Joan's self-employment tax for 2019 is $2,014 (rounded to the nearest dollar).

The correct answer is B.

Joan Earns $119,900 in Her Job as a Physician's Assistant