Question

Oliver owns Wifit, an unincorporated sports store. In 2019, Wifit earned $100,000 before Oliver drew out a salary of $60,000.

What is Oliver’s 2019 deduction for self-employment taxes?

a. $2,826

b. $7,065

c. $7,650

d. $14,130

e. $15,300

Answer 1

c. $7,650

Step-by-step explanation:

As IRS regulate, the self-employment tax is 15.3% charged on business profit, but the IRS let the employer count half of tax, or 7.65%, as a business deduction for purposes of calculating the tax.

So in this case, Oliver’s 2019 deduction for self-employment taxes is $7,650 = $100,000 x 7.65%