Question

Required information [The following information applies to the questions displayed below.] Clem is married and is a skilled carpenter. Clem's wife, Wanda, works part-time as a substitute grade school teacher. Determine the amount of Clem's expenses that are deductible for AGI this year (if any) under the following independent circumstances: (Leave no answer blank. Enter zero if applicable.) c. Clem paid self-employment tax of $21,000 (the employer portion is $10,500), and Wanda had $7,600 of Social Security taxes withheld from her pay. Deductible amount for AGI

Answer 1

When self employment tax is paid, only 50% of the tax paid is deductible. Also, any social security taxes withheld from pay are not deductible. Hence the toal amount deductible is $10,500 (50% of $21,000).