Brenda is a self-employed accountant.She has net earnings (profit)from her practice of $74,000.Her self-employment taxes for the year are: (Round your answer to 2 decimal places. )

Question

Quizplus · Accepted Answer

Self-employment taxes consist of Social Security and Medicare taxes. For the year in question, the self-employment tax rate is 15.3% (12.4% for Social Security on the first $142,800 of net earnings and 2.9% for Medicare on all net earnings). Brenda's net earnings of $74,000 are below the Social Security cap, so her self-employment tax is calculated as $74,000 * 15.3% = $11,322. However, only 92.35% of net earnings are subject to self-employment tax, so the calculation should be $74,000 * 92.35% * 15.3% = $10,455.87.

Brenda Is a Self-Employed Accountant