Bono is the self-employed owner of JAB Consulting. Her estimated annual earnings are $68,480.00 and she expects to pay 22% of this amount in income tax. What will be her quarterly estimated tax payment for the second quarter? (For self-employed persons, social security tax is 12.4% of wages up to $128,400, and Medicare tax is 2.9% of all wages.)

Question

Quizplus · Accepted Answer

Bono's total estimated tax includes income tax and self-employment tax (Social Security and Medicare). Income tax: $68,480 * 22% = $15,065.60. Social Security tax: $68,480 * 12.4% = $8,491.52 (since $68,480 is less than $128,400, all of it is subject to Social Security tax). Medicare tax: $68,480 * 2.9% = $1,985.92. Total estimated tax: $15,065.60 (income tax) + $8,491.52 (Social Security tax) + $1,985.92 (Medicare tax) = $25,543.04. Quarterly estimated tax payment: $25,543.04 / 4 = $6,385.76.

Bono Is the Self-Employed Owner of JAB Consulting