Katherine earned $100,000 from her job at a local business in 2014.She also had $42,000 in self-employed consulting income.What is the amount of her self-employment tax rounded to the nearest dollar?

Question

Quizplus · Accepted Answer

Self-employment tax is calculated by multiplying self-employment income by 15.3%. 
So, the self-employment tax for Katherine would be 0.153 x $42,000 = $6,426. However, only 92.35% of self-employment income is subject to self-employment tax. 
So, the taxable amount is 0.9235 x $42,000 = $38,589. 
Therefore, the self-employment tax rounded to the nearest dollar is $3,232. Option B is the closest choice.

Katherine Earned $100,000 from Her Job at a Local Business