Question

Rochelle is a general partner in Megawatt Partnership. For 2018, her schedule K-1 from the partnership reported her share of income and distributed cash as follows

Ordinary income	$25,000
Cash distribution	$5,000

Calculate the Self-employment tax that should be paid by Rochelle.

Answer 1

Self-Employment Tax Analysis	Social Security	Medicare
Ordinary income from partnership	$       25,000.00	$ 25,000.00
Less: self-employment adjustment at 7.65%	$         1,912.50	$   1,912.50
Taxable self-employment earnings	$       23,087.50	$ 23,087.50
Self-employment tax:
Social security at 12.4%	2,862.85
Medicare at 2.9%		669.54
Total self-employment tax	3,532.39
Tax-deductible portion Half	1,766.19