A self-employed individual has earnings from his business of $300,000.For the earnings in excess of the $113,700,he will only have to pay the 2.9% Medicare tax.

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Medicare tax is split into two parts: 1.45% is paid by both the employee and employer, and the remaining 1.45% is paid only by the employee. However, there is currently a cap on the amount of income subject to the Medicare tax. In 2021, this cap is $142,800. Therefore, for a self-employed individual with earnings of $300,000, they would still owe Medicare tax on the amount between $113,700 and $142,800, which is $2,320.10 (1.45% of $160,100).

A Self-Employed Individual Has Earnings from His Business of $300,000