Question

In 2019, Miranda records net earnings from self-employment of $146,000. She has no other income. Determine the amount of Miranda's self-employment tax and her for AGI income tax deduction.

In your computations round all amounts to two decimal places. Round your final answers to the nearest dollar.

Miranda's self-employment tax is: $ ___blank______

and she has a: $____blank_____

deduction for AGI.

Answer 1

Calculation of Self-Employment Tax and AGI income tax deduction

Self-Employment Tax Analysis	Social security	Medicare
Adjusted earnings	$132,900	$146,000
Less: self employment adjustment	$0	$11,169
Taxable self employment earnings	$132,900	$134,831
Self employment tax	$16,480	$3,910
Total self employment tax		$20,390
Tax deductable portiom		$10,195

Miranda total self-employment tax of $20,390 is comprised of $16,480 Social Security tax and $3,910 Medicare tax. The tax-deductible portion for AGI is $10,195.

Note : If you are self-employed, your Social Security tax rate is 12.4 percent and your Medicare tax is 2.9 percent on those same amounts of earnings but you are able to deduct the employer portion.

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