Question

Determine the self-employment tax that would be paid for 2016 by each of the following taxpayers. If there is no self-employment tax, explain why.

A.) Net business profit, $39,000; dividend income, $300; wages subject to social security, $5,000; gross rental income, $6,000; net rental income, $1,500.

B.) Net business profit, $29,000; dividend income, $500; wages subject to social security, $60,000.

C.) Net business proft, $70,000; dividend income, $200.

D.) Net business profit, $15,000; dividend income,$100; wages subject to social security, $114,000.

E.) Net business profit, $3,000; dividend income, $450; net rental loss, $500.

F.) Net business profit, $450; dividend income, $50; wages subject to social security, $400.

Answer 1

Self-employment tax that would be paid for 2016 by each of the following taxpayers:
Taxpayer	Net Business Profit	Self-employment tax	Dividend income	Self-employment tax	Wages subject to social security	Self-employment tax	Gross rental income	Self-employment tax	Net rental income	Self-employment tax
A	$39,000.00	Yes	$300.00	No (since the paying company must have already paid tax on it)	$5,000.00	No (since it is employment and not 'self-employment')	$6,000.00	No (since tax is always paid on net, i.e., after deducting the relevant expenditure)	$1,500.00	No (since it is not a business income. However, if the business of the tax payer includes rent income then, Yes)
B	$29,000.00	Yes	$500.00	No (since the paying company must have already paid tax on it)	$60,000.00	No (since it is employment and not 'self-employment')
C	$70,000.00	Yes	$200.00	No (since the paying company must have already paid tax on it)
D	$15,000.00	Yes	$100.00	No (since the paying company must have already paid tax on it)	$1,14,000.00	No (since it is employment and not 'self-employment')
E	$3,000.00	Yes	$450.00	No (since the paying company must have already paid tax on it)					-$500.00	N.A. (since it is a loss which would be netted off against taxable income)
F	$450.00	Yes	$50.00	No (since the paying company must have already paid tax on it)	$400.00	No (since it is employment and not 'self-employment')
Note: Self-employment tax cannot be calculated here since information about rate and the relevant geographical territory is not given. Thus, only the income subject to self-employment tax have been identified here.