Question

In: Accounting

Jack Stewart is an employee of Dr. Sloan’s medical practice, where he earns a salary of...

Jack Stewart is an employee of Dr. Sloan’s medical practice, where he earns a salary of $100,000 in 2019. He also runs his own business on the side and earns $50,000 of net self-employment income in 2019. How much Self-Employment (SE) tax does Jack owe for 2019 related to his $50,000 self-employment income?

Considering the SE tax you calculated for Jack Stewart in the previous question, and also that Jack, who files single, paid $4,000 in student loan interest and made a $7,000 cash contribution to a qualified charity, what is Jack’s 2019 AGI? (His gross income was $150,000) (12 points)

Solutions

Expert Solution

a) Your total self-employment tax of $7,065 is comprised of $5,726 Social Security tax (12.4%)and $1,339 Medicare tax(2.9%). The tax-deductible portion for Form 1040 is $3,532.

Self-Employment Tax Analysis Social Security Medicare
'Adjusted' earnings $50,000 $50,000
Less: self-employment adjustment $3,825 $3,825
Taxable self-employment earnings $46,175 $46,175
Self-employment tax $5,726 $1,339
Total self-employment tax $7,065
Tax-deductible portion

$3,532

B)

NOTE -Student loan interest

Student loan interest deduction is capped at $2,500. If you are a Single filer, you are not eligible for the deduction if your total income is greater than $80,000 ($165,000 for married filing jointly).

ekkarill92 answered 1 year ago
Next > < Previous

Related Solutions

Dr. Steve Rosenthal has his own medical practice. He specializes in the treatment of diabetics. His...
Dr. Steve Rosenthal has his own medical practice. He specializes in the treatment of diabetics. His staff consists of a receptionist, two nurses, a lab technician, and a dietitian. As patients enter the outer office, they check in with the receptionist. The patient then waits until called by a nurse. When called, the patient moves from the waiting room to the inner offices. The patient must weigh in and is then assigned a room. The nurse assigning the patient to...
Is there a relationship between a person's height and the salary he or she earns? In...
Is there a relationship between a person's height and the salary he or she earns? In a study published in the Journal of Applied Psychology,† a positive correlation was found between the heights and the salaries of the participants. The correlation was found to be strongest for employees in sales and management positions. Suppose you conduct a similar study by obtaining height and earnings data from 20 randomly selected people in your community. You use statistical computing software (such as...
Christine Boone is an employee at Americamp Vehicles. She earns a salary of $34,750 annually, paid...
Christine Boone is an employee at Americamp Vehicles. She earns a salary of $34,750 annually, paid biweekly. She contributes to the following fringe benefits and other deductions: Medical insurance: $80 per pay period Dental insurance: $15 per pay period 401(k): 5% of gross pay Union dues: $100 per month Additional withholding: $75 per month Fringe benefits Amount Medical insurance Dental insurance 401(k) Union dues Additional withholding Total amount of Christine's fringe benefits and other deductions $0.00
Aimee is a salaried nonexempt employee who earns an annual salary of $54,000 for a 35-hour...
Aimee is a salaried nonexempt employee who earns an annual salary of $54,000 for a 35-hour workweek, paid biweekly. The employer pays overtime for any hours worked in excess of 35 per week. During a pay period, she worked 73.5 hours. She has requested that she take compensatory time in lieu of paid overtime. How much compensatory time should she receive, assuming that her firm approves the compensatory time? 3.5 hours 2.75 hours 5.25 hours 10.25 hours
Dr Jones is evaluating an offer for his medical practice that will allow him to retire...
Dr Jones is evaluating an offer for his medical practice that will allow him to retire five years early. He has received an offer of R650 000 for his practice and he can invest this amount in an account earning 15% per year, compounded annually. If the practice is expected to generate the following cash flows, advise Dr Jones as to whether he should accept this offer and retire now or not.   End of year Amount (in rands) 1 160...
Dr Jones is evaluating an offer for his medical practice that will allow him to retire...
Dr Jones is evaluating an offer for his medical practice that will allow him to retire five years early. He has received an offer of R650 000 for his practice and he can invest this amount in an account earning 15% per year, compounded annually. If the practice is expected to generate the following cash flows, advise Dr Jones as to whether he should accept this offer and retire now or not.   End of year Amount (in rands) 1 160...
Max asks Jack if he would join him in an initiative to increase employee satisfaction in...
Max asks Jack if he would join him in an initiative to increase employee satisfaction in the workplace. On its face, the initiative sounds good. However, Jack is not sure that Max has the same values or management style or, more importantly, whether Max has ulterior motives for launching this initiative (for his own self-promotion, etc.). 1. Analyze the situation. 2. Then, draft a conversation Jack may engage in with Max, including a list of questions regarding his concerns.
Max asks Jack if he would join him in an initiative to increase employee satisfaction in...
Max asks Jack if he would join him in an initiative to increase employee satisfaction in the workplace. On its face, the initiative sounds good. However, Jack is not sure that Max has the same values or management style or, more importantly, whether Max has ulterior motives for launching this initiative (for his own self-promotion, etc.). draft a conversation Jack may engage in with Max, including a list of questions regarding his concerns. using three of these theories, analyze the...
At the beginning of 2019, Dr. John opened his medical practice as a personal service corporation....
At the beginning of 2019, Dr. John opened his medical practice as a personal service corporation. The entity uses a December 31 year-end and the accrual method of accounting. During the year, the corporation billed patients and insurance companies for $485,000 for medical services. At the end of the year, $60,000 of this amount had not been collected. The entity earned $1,500 interest on a money market account held in the local bank and another $1,500 interest on an investment...
At the beginning of 2017, Dr. John opened his medical practice as a personal service corporation....
At the beginning of 2017, Dr. John opened his medical practice as a personal service corporation. The entity uses a December 31 year-end and the accrual method of accounting. During the year, the corporation billed patients and insurance companies for $485,000 for medical services. At the end of the year, $60,000 of this amount had not been collected. The entity earned $1,500 interest on a money market account held in the local bank and another $1,500 interest on an investment...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT