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Calculating Self-Employment Tax

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1. Toby worked as an employee during the first half of the year earning $80,000 of salary. Toby's employer withheld $4,960 of Social Security tax and $1,160 of Medicare tax. In the second half of the year, he was self-employed and reported $85,000 of self-employment income on his Schedule C. What amount of self-employment taxes is Toby required to pay?

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Solution Summary

This solution shows how to calculate self-employment tax based on the facts provided.

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This scenario is missing a few important facts. The tax year is a major factor in calculating self-employment tax, as it can change (and has, in certain years). We are assuming that because it is 2014, the tax rates from 2014 will be used. Also, we have to assume that the $85,000 being reported in income is in regards ...

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