Question

Juli earned $165,000 from her regular job and had $30,000 of taxable self employment income.  How much is Juli’s self employment tax?

Answer 1

To calculate Juli's self-employment tax, we need to consider the self-employment tax rate and the income subject to self-employment tax.

1. Determine the self-employment tax rate: The self-employment tax consists of two components: the Social Security tax and the Medicare tax. As of 2021, the self-employment tax rate is 15.3% (12.4% for Social Security and 2.9% for Medicare).

2. Determine the income subject to self-employment tax: The income subject to self-employment tax includes the net self-employment income. Net self-employment income is calculated by subtracting any allowable business expenses from the gross self-employment income.

In this case, Juli's taxable self-employment income is given as $30,000, so the entire $30,000 is subject to self-employment tax.

3. Calculate the self-employment tax: To calculate the self-employment tax, multiply the income subject to self-employment tax by the self-employment tax rate.

Self-employment tax = Taxable self-employment income * Self-employment tax rate Self-employment tax = $30,000 * 15.3% Self-employment tax = $30,000 * 0.153 Self-employment tax = $4,590

Therefore, Juli's self-employment tax would amount to $4,590 based on the given information.