In 2013, Amanda earned $70,000 self-employment income. She was allowed a $4,945 above-the line deduction for her SE tax. Compute Amanda's maximum contribution to her profit-sharing Keogh plan.

Question

Quizplus · Accepted Answer

Amanda's maximum contribution to her Keogh plan is calculated as 20% of her net earnings from self-employment after the deduction for self-employment tax. Her net earnings are $70,000 - $4,945 = $65,055. Therefore, 20% of $65,055 is $13,011.

In 2013, Amanda Earned $70,000 Self-Employment Income