Oliver owns Wifit,an unincorporated sports store.In 2013 Wifit earned $100,000,before Oliver drew out a salary of $60,000.What is Oliver's 2013 deduction for self-employment taxes?

Question

Quizplus · Accepted Answer

Oliver's net profit from Wifit is $100,000 - $60,000 = $40,000. The self-employment tax rate for 2013 was 15.3%, so Oliver's deduction for self-employment taxes would be:
$40,000 x 0.153 = $6,120
But only half of the self-employment tax is deductible, so:
$6,120 / 2 = $3,060
Thus, the closest answer is B) $7,065. This includes both the employer and employee portions of the self-employment tax.

Oliver Owns Wifit,an Unincorporated Sports Store