Question

Kyle worked as a free-lance software engineer for the first three months of 2018. During that time, he earned $62,000 of self-employment income. On April 1, 2018, 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 $172,000 in salary. What amount of FICA taxes (self-employment and employment related) does Kyle owe for the year?(Round your intermediate and final answer to the nearest dollar amount.

Answer 1

Ans-

	Description	Amount	Remarks
1	Social Security tax paid as an employee [(lesser of [(a)$172,000 wages or (b) $128,400 maximum base] *6.2%	$7,960.80	$128,400*6.2%
2	Social Security wage base limit less employee compensation subject to Social Security tax	$-	$128,400-$128,400, limited to $0
3	Net earnings from self- employment	$57,257	$62,000*92.35%
4	Social Security portion of self- employment tax	$-	Lesser of [Step (2) or (3)] * 12.4%
5	Employer portion of Medicare tax for self employment tax purposes	$830.23	Step (3) *1.45%
6	Sum of taxpayer's compensation and net earnings from self- employment	$229,257	$172,000+Step (3)
7	Lesser of [Step (6) amount or $200,000]*1.45%	$2,900	$200,000*1.45%
8	Greater of [(a) zero or (b) the amount from step (6) minus $200,000]*2.35%	$687.54	($229,257-$200,000)*2.35%
9	Employee portion of Medicare tax	$3,587.54	Step (7) +Step (8)
10	Total FICA taxes owed for year	$12,378.57	Step (1)+(4)+(5)+(9)