What is the total tax due for 2016, including self-employment tax, for Stuart, assuming th he earned $20,000 in wages, earned $24,000 in self-employment income from his Frst business, had a loss of $10,000 from his second business, received $3,000 in interest inco and had $5,100 in nonqualiFed dividend income? Please show work.
(Question and Answer): earned $20,000 in wages, earned $24,000 in self-employment
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(Question and Answer): earned $20,000 in wages, earned $24,000 in self-employment
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Stuart’s Self-Employment Tax:
Stuart’s net earnings from self-employment are$12,929([$24,000-10,000]*0.9235).
Stuart’s self-employment tax is: $1978.137($12,929*15.3%), and the process ofcomputation is as follow:
OASDI$12,929*12.4%=$1603.196
HI$12,929*2.9%=$374.941
$1978.137
Gross Income:
Wages $20,000
Interest income 3,000
Nonqualified dividend income 5,100
Total $28,100
Deduction for GI
1/2 of self-employment tax ($989.0685)
100% of HI ($374.941)
($1364.0095)
AGI $26735.991
Greater of Standard Deduction (for 2016) ($6,300)
Personal Exemption (for 2016) ($4050)
Taxable Income $16385.991
According to the schedule for 2016, tax liability is computed as follow:
$9,275 * 10%=$927.5
$7110.991 * 15%=$1066.64865
Tax Liability $1994.14865
Total tax due:
Federal tax $1994.14865
Self-employment tax $1,978.137
$3972.28565
The total tax due for 2016 is $3,972.28565
