Question

Eva received $57,000 in compensation payments from JAZZ Corp. during 2020. Eva incurred $8,000 in business expenses relating to her work for JAZZ Corp. JAZZ did not reimburse Eva for any of these expenses. Eva is single and she deducts a standard deduction of $12,400. Based on these facts, answer the following questions: Use Tax Rate Schedule for reference. (Leave no answer blank. Enter zero if applicable.)

Problem 8-68 Part a (Algo)

a. Assume that Eva is considered to be an employee. What amount of FICA taxes is she required to pay for the year? (Round your final answer to the

Amount of FICA taxes?_________

c. Assume that Eva is considered to be a self-employed contractor. What is her self-employment tax liability and additional Medicare tax liability for the year? (Round your intermediate computations & final answers to the nearest whole dollar amount. Leave no answer blank. Enter zero if applicable.)

Self Employment tax liability?______

Additional Medicare Tax Liability?_____

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Rasheed works for Company A, earning $382,000 in salary during 2020.

Assuming he is single and has no other sources of income, what amount of FICA tax will Rasheed pay for the year? (Round your intermediate and final answer to the nearest whole dollar amount.)

Amount of FICA TAX?_________

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Carol works for ABC Company and earned $66,000 for the entire year 2018. How much in FUTA tax is her employer required to withhold in her name? Assume that the employer receives the maximum credit for state unemployment taxes.

Multiple Choice

A.$49.40.

B.$0.

C.$450.00.

D.$42.00.

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Alice is single and self-employed in 2020. Her net business profit on her Schedule C for the year is $184,000.

What is her self-employment tax liability and additional Medicare tax liability for 2020? (Round your final answer to the nearest whole dollar amount. Leave no answer blank. Enter zero if applicable.)

Self Employment tax liability?______

Additional Medicare Tax Liability?_____

Answer 1

Eva received $57,000 in compensation payments from JAZZ Corp. during 2020. Eva incurred $8,000 in business expenses relating to her work for JAZZ Corp. JAZZ did not reimburse Eva for any of these expenses. Eva is single and she deducts a standard deduction of $12,400. Based on these facts, answer the following questions: Use Tax Rate Schedule for reference. (Leave no answer blank. Enter zero if applicable.)
Problem 8-68 Part a (Algo)
a. Assume that Eva is considered to be an employee. What amount of FICA taxes is she required to pay for the year? (Round your final answer to the
Amount of FICA taxes (57,000 x 7.65%)	$         4,360.50
Eva’s salary is below the Social Security wage base limit for 2020 of $137,700, she pays FICA taxes of 7.65% on her entire $57000
c. Assume that Eva is considered to be a self-employed contractor. What is her self-employment tax liability and additional Medicare tax liability for the year? (Round your intermediate computations & final answers to the nearest whole dollar amount. Leave no answer blank. Enter zero if applicable.)
Self Employment tax liability =	$6,923
Additional Medicare Tax Liability	0
Description	Amount	Explanation
(1) Gross self-employment compensation	$57,000
(2) Business expenses	-8,000
(3) Net self-employment (Schedule C) income	$49,000	(1) + (2)
(4) Percentage of self-employment income subject to self-employment tax	92.35%
(5) Earnings from self-employment	$45,252	(3) × (4)
(6) Self-employment tax rate	15.30%	Eva’s income is below the Social Security tax compensation limit for 2020 so entire earnings are subject to 15.3% rate.
(7) Self-employment tax liability	$6,923	(5) × (6); She is not subject to the additional Medicare tax because her net earnings from self-employment do not exceed $200,000.
2) Rasheed works for Company A, earning $382,000 in salary during 2020.
Assuming he is single and has no other sources of income, what amount of FICA tax will Rasheed pay for the year? (Round your intermediate and final answer to the nearest whole dollar amount.)
Amount of FICA TAX = (137,700 x 6.2%) + ($382,000 x 1.45%)	$            14,076
Carol works for ABC Company and earned $66,000 for the entire year 2018. How much in FUTA tax is her employer required to withhold in her name? Assume that the employer receives the maximum credit for state unemployment taxes. Multiple Choice A.$49.40. B.$0. C.$450.00. D.$42.00.
FUTA = $7,000 x (6% - 5.4% (credit Maximum)	$              42.00	Option D
Alice is single and self-employed in 2020. Her net business profit on her Schedule C for the year is $184,000.
What is her self-employment tax liability and additional Medicare tax liability for 2020? (Round your final answer to the nearest whole dollar amount. Leave no answer blank. Enter zero if applicable.)
Self Employment tax liability	$25,998
Additional Medicare Tax Liability?_____	0
(1) Net self-employment (Schedule C) income	$184,000
(2) Percentage of self-employment income subject to self-employment tax	92.35%
(3) Earnings from self-employment	$169,924	(1) × (2)
(4) Self-employment tax rate	15.30%	Eva’s income is below the Social Security tax compensation limit for 2020 so entire earnings are subject to 15.3% rate.
(5) Self-employment tax liability	$25,998	(4) × (5); She is not subject to the additional Medicare tax because her net earnings from self-employment do not exceed $200,000.