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In 2020, Maria records self-employed earnings of $135,000
In 2020, Maria records self-employed earnings of $135,000. Using the format illustrated in the text, compute Maria's self-employment tax liability and the allowable income tax deduction for the self-employment tax paid. Do not round intermediate computations. Round your final answers to the nearest dollar. X, and the allowable income tax deduction Maria's self-employment tax liability is for the self-employment tax paid is $ || x. b. Select the appropriate calculation of the 2020 self-employment tax as a Microsoft Excel formula. = IF(C4*0.9235
Expert Solution
Answer : self -employment tax liability is $ 19074.89 and the allowable income tax deduction for the self employment tax paid is $ 9537.
w.n 1
Net business Income or loss $ 135,000
92.35 % of business income $124672.50 (135000*92.35%)
Income subject to self employment tax $124672.50
MEDICARE TAX (2.9%) $ 3615.50
FICA TAX (12.4% ) $ 15459.39
Total self employment tax for 2020 $19074.89
Tax deduction portion for 2020 (50%) $ 9537.45 round off to 9537
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