Question

Ellen uses the head of household filing status and has a dependent daughter. Ellen has self-employment income of $310,000 as an architect and $10,000 of self-employment losses from a jewelry making business.

a. What is Ellen’s 0.9% additional Medicare tax for 2018?
b. Is Ellen allowed to include a portion of the 0.9% additional Medicare tax in computing the deduction for self-employment taxes reported as an adjustment for AGI on the front page of her income tax return?

Answer 1

Ans: Taxpayer need to pay an additional 0.9% medicare tax if their income exceeds certain limit i.e. $200,000 for individual and $250,000 i,.e. for married filling jointly.

A). Ellen 0.9% additional medicare tax for 2018:

=> $310000-10,000-$200,000)*0.9%

=> $100,000*0.9%

=> $ 900

B). No he is not allowed to include portion of the 0.9% additional Medicare tax in computing the deduction for self-employment taxes reported as an adjustment for AGI on the front page of her income tax return rather for additional 0.9% he has to file form 8959