Shante is employed by a local pharmaceutical company where she earned $48,000 in 2014.During the year,she also had self-employment income of $18,000.Her self-employment tax rounded to the nearest dollar is:

Question

Quizplus · Accepted Answer

The self-employment tax rate is 15.3%. The Social Security wage base limit for 2014 was $117,000. Shante's total income ($48,000 + $18,000 = $66,000) is below this limit, so she pays self-employment tax on the full $18,000. The tax is $18,000 * 15.3% = $2,754. However, she can deduct half of the self-employment tax when calculating her adjusted gross income, which is $2,754 / 2 = $1,377. Therefore, the self-employment tax is $2,754 - $1,377 = $2,543.

Shante Is Employed by a Local Pharmaceutical Company Where She