Question

Martin Binford is an author. He has no income he would report on line 1a or line 1b of his schedule SE. He earned $143,380 in 2010 from his books. He had $3,563 in expense. How much self-employment tax does he owe?

Answer 1

He owes $33556.08 worth of self employment tax.

Step-by-step explanation:

consider firstly calculating the profit that he has made after this period which can be calculated as profit= income minus expenses and in this case we are given income earned from self employment of $143380 and the expenses incurred in generating this income is $3563 so we find he difference in these two amounts which is $143380-$3563 = $139817 therefore this profit is the taxable income that he needs to deduct tax from.

in order to calculate tax from this amount we go to the tax table so therefore a person earning between $84201 to $160725 is charged 24% tax as per tax table. so now we will say $139817 x 24% = $33556.08 is the tax he owes the IRS.