Question

Kyle, a single taxpayer, worked as a free-lance software engineer for the first three months of 2019. During that time, he earned $80,000 of self-employment income. On April 1, 2019, Kyle took a job as a full-time software engineer with one of his former clients, Hoogle Inc. From April through the end of the year, Kyle earned $158,000 in salary. What amount of FICA taxes (self-employment and employment related) does Kyle owe for the year? (Round your intermediate calculations to the nearest whole dollar amount.) Self-employment/FICA tax

Answer 1

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Solution: a) b) c) d) e) Year 2019 rules have been applied. 2019 wage limit is $ 132900. Answer is highlighted in yellow: As per Tax year 2019 wage limit, answer will be different for different year: Kyle: Particulars Amount Explanation Social Security tax paid as an employee $ 8,239.80 (132900*6.2%) Balance limit for self employment tax purpose (132900-132900) Net earnings from self-employment $ 73,880.00 (80000*92.35%) Social Security portion of self-employment tax - Lesser of (Step (b) or (c)] x 12.4% Employer portion of Medicare tax for self employment tax $ 1,071.26 (cx 1.45%) Sum of Salary and net earnings from self-employment 231880.00 (158000+73880) Lesser of (Step (f) amount or $200,000] x 1.45% $ 2,900.00 (200000*1.45%) Greater of [(1) zero or (2) the amount from Step (f) $ 749.18 (231880 - 200000) * 2.35% minus $200,000] x 2.35%. Employee portion of Medicare tax $ 3,649.18 (gth) FICA taxes (self-employment and employment related) $ 12,960 (a + d + e + i) f) h)