Oliver owns Wifit,an unincorporated sports store.In 2016 Wifit earned $100,000,before Oliver drew out a salary of $60,000.What is Oliver's 2016 deduction for self-employment taxes?

Question

Quizplus · Accepted Answer

Oliver's deduction for self-employment taxes can be calculated as follows:
- First, we need to calculate Oliver's net income from self-employment: $100,000 - $60,000 (salary) = $40,000
- Next, we need to calculate the self-employment tax on that net income: $40,000 x 0.9235 x 0.153 = $5,891
- Finally, we need to calculate the deduction for half of the self-employment tax, which is an adjustment to arrive at Oliver's adjusted gross income: $5,891 / 2 = $2,945.50
Therefore, Oliver's deduction for self-employment taxes is $2,945.50 x 2 = $7,065. Answer choice B is correct.

Oliver Owns Wifit,an Unincorporated Sports Store