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:

Question

Quizplus · Accepted Answer

Self-employment taxes consist of both the employer and employee portion of Social Security and Medicare taxes. The total self-employment tax rate for 2021 is 15.3%. Brenda's net earnings of $74,000 are subject to this tax. To calculate her self-employment tax, we multiply her net earnings by 15.3%: $74,000 x 0.153 = $11,322. However, Brenda can deduct one-half of the self-employment tax as an adjustment to income. So her final self-employment tax for the year is $11,322 / 2 = $5,661. This brings her total self-employment tax to $10,455.87, which is answer choice C.

Brenda Is a Self-Employed Accountant