Question

1. Sue is a self-employed. Her net profit from the self-employment in 2018 is $150,000. What’s her deductible portion of SE tax on line 27 of Schedule 1? a) $11,475 b) $10,597 c) $ 9,969 d) $ 9,823

2. Young is single and self-employed. His net profit from the business is $100,000. His SE tax on Schedule SE is $14,130. He contributed $6,000 to his self-employed SEP IRA account. He also paid $7,800 self-employed health insurance premium in 2018. What is the amount of adjustments to income on line 36 of Schedule 1 (Form 1040)? a) $20,865 b) $13,800 c) $13,065 d) $14,865

3. Ester, 55, is single. She has earned income. Her modified AGI is $62,000. She is considering contributing $6,500 to her IRA account or Roth IRA account. All the following are correct, except: a) If she is covered by a retirement plan at work for the tax year, her contribution of $6,500 to her traditional IRA if fully deductible. b) She can split the funds between the traditional IRA account and the Roth IRA account if the total amount does not exceed $6,500. c) She can contribute $6,500 to her Roth IRA account; however, it is not deductible on her tax return. d) Ester plans to work until she is 75 years old. She can continue to contribute to her traditional or Roth IRA as long as she has earned income.

4. John is considering establishing a health saving account. Which of the following statements regarding health savings account (HSA) is correct? a) Contributions by an S corporation to a 2% shareholder-employee’s HSA for services are not included in the employee’s W-2 and not deductible by the S corporation. b) The taxpayer owns the account and the account moves with the taxpayer even if he changes employers. c) The taxpayer can be enrolled in Medicare or be claimed as a dependent on another’s return. d) Both eligible spouses can have a joint HSA account.

Answer 1

1)self employment tax is 9.2% so

=1,50,000*9.2 =1,38,525

therefore, self employment tax =1,50,000-1,38,500

= 11,475.

2)ADJUSTMENTS TO INCOME=20,865

3)D)She can continue to contribute to her traditional or Roth IRA as long as she has earned income.

4)C)The taxpayer can be enrolled in Medicare or be claimed as a dependent on another’s return.