question archive Kyle, a single taxpayer, worked as a freelance software engineer for the first three months of 2020

Kyle, a single taxpayer, worked as a freelance software engineer for the first three months of 2020

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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.)

 

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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