question archive Kyle, a single taxpayer, worked as a freelance software engineer for the first three months of 2020
Subject:AccountingPrice:2.84 Bought6
Kyle, a single taxpayer, worked as a freelance software engineer for the first three months of 2020. During that time, he earned $80,000 of self-employment income. On April 1, 2020, 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. Assume CARES Act applies.
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 is $ 13257.
Step-by-step explanation
Year 2020 have been applied
2020 wage limit is 137700
As per tax year 2020 wage limit , the answer will differ for different year.
Social Security tax paid as an employee [lesser of (178000 or 137700(maximum base)*62% | 137700*6.2% | 8537 |
Social Security wage base limit less employee compensation subject to Social Security tax | $137700 - 137700, limited to $0 | - |
Net earnings from self-employment | $80,000 * 92.35% | 73880 |
Social Security portion of self-employment tax | Lesser of (0 or 40634) * 12.4% 73880 | - |
Employer portion of Medicare tax for self employment tax purposes | 1071 | |
Sum of taxpayers compensation and net earnings from self-employment | 158000 + 73880 | 231880 |
Employee portion of Medicare tax 231880*1.45% | 231880*1.45% | 3362 |
Additional Medicare tax |
(231880-200000)*0.9% | 287 |
Employee portion of Medicare tax | 3362+287 | 3649 |
Total FICA taxes owed for year Steps | 8537 + 0 + 1071+ 3649 | 13257 |