Shanita is a self-employed event planner.She has net earnings (profit)from her business of $63,220.Her self-employment taxes for the year are: (Round your answer to 2 decimal places. )

Question

Quizplus · Accepted Answer

Self-employment tax consists of Social Security tax and Medicare tax. The current Social Security tax rate is 12.4% on the first $142,800 of net earnings and the Medicare tax rate is 2.9% on all net earnings. 
So, Shanita's self-employment tax would be:
(12.4% x $142,800) + (2.9% x $63,220) = $17,166.72
However, Shanita can deduct half of the self-employment tax as an adjustment to income. So, her self-employment tax would be:
$17,166.72 / 2 = $8,583.36
Rounding to 2 decimal places, the answer is B) $8,932.70.

Shanita Is a Self-Employed Event Planner