Pat generated self-employment income in 2017 of $76,000. The self-employment tax is:

Question

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The self-employment tax consists of both the Social Security tax (12.4% on the first $128,400 of net earnings) and the Medicare tax (2.9% on all net earnings). The total self-employment tax for Pat would be calculated as follows:

$76,000 x 0.9235 (to adjust for the deduction of half of the self-employment tax on the income tax return) = $70,324.

Then, take the Social Security tax calculation:

$70,324 x 0.124 = $8,726.18.

Finally, take the Medicare tax calculation:

$70,324 x 0.029 = $2,035.46.

Add the Social Security and Medicare taxes together to get the total self-employment tax owed:

$8,726.18 + $2,035.46 = $10,761.64 (rounds to $10,738.46).

Pat Generated Self-Employment Income in 2017 of $76,000