Question

Alexander Ryan earns net self employment income of 115,000. he works a second job from which he receives FICA taxable earnings of 44,000.

self employment tax?

Answer 1

If a person is in employment and is self employed too ,his employment income will be taken first for calculation of cap limit and then self employment is taken .Under self employment tax ,person is liable to pay both employee and employer portion to government .FICA tax rate for 2019 includes the following:

**The employee's portion of the social security tax ,which is 6.2% of first 132900 of net income

**The employer's portion of the social security tax ,which is 6.2% of first 132900 of net income

**The employee's portion of the medicare tax ,which is 1.45% of all net income (no cap or limit on net income)

**The employer's portion of the medicare tax ,which is 1.45% of all net income (no cap or limit on net income)

calculation of self employment tax:

since the total taxable income of 115000+44000=159000 is more than maximum cap limit of 132900 ,the taxable income for calculation for social security tax is limited to 132900

FICA	Income subject to tax	Tax rate	Tax amount
social security tax	132900-44000 taken first =88900	6.2+6.2=12.4%	88900*12.4%=11023.6
Medicare tax	159000	1.45+1.45=2.9%	159000*2.9%=4611
		self employment taxes owed	15634.6