Scott Stewart is the self-employed owner of Stewart Software. His estimated annual earnings are $48,000.00 and he expects to pay 18% of this amount in income tax. What will be his 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

To calculate the quarterly estimated tax payment, first calculate the total annual tax liability. Income tax is 18% of $48,000, which is $8,640. Social Security tax is 12.4% of $48,000, which is $5,952. Medicare tax is 2.9% of $48,000, which is $1,392. The total annual tax liability is $8,640 + $5,952 + $1,392 = $15,984. The quarterly payment is $15,984 / 4 = $3,996.

Scott Stewart Is the Self-Employed Owner of Stewart Software