Question

Kyle, a single taxpoyer, worked as a freelance software engineer for the first three months of 2022 . During that time, he eamed $50.000 of self-employment income. On April 1, 2022, Kyle took a job as a full-time software engineer with one of his former clients. Hoogle incorporated From April through the end of the year, Kyle earned $196,000 in salary. What omount of FICA taxes (self-employment and employment related) does kyle owe for the year?

Answer 1

Kyle owes a total of $18,819 in FICA taxes for the year, which includes both self-employment income and salary.

Step-by-step explanation:

Kyle, as a single taxpayer, needs to pay FICA taxes for both his self-employment income and his salary as a full-time software engineer. FICA taxes consist of Social Security and Medicare taxes. For self-employment income, Kyle will be responsible for paying both the employee and employer portions of the taxes, which are 6.2% for Social Security and 1.45% for Medicare. Therefore, for his self-employment income of $50,000, Kyle will owe $3,100 for Social Security and $725 for Medicare.

For his salary as a software engineer, the employer will deduct the employee portion of the FICA taxes from his paycheck. Since Kyle earned $196,000, the employee portion of the Social Security tax is $196,000 * 6.2% = $12,152, and the employee portion of the Medicare tax is $196,000 * 1.45% = $2,842. However, since the employer's portion is also passed along to the employee in the form of lower wages, Kyle effectively pays the full amount. Therefore, for his salary, Kyle will owe $12,152 for Social Security and $2,842 for Medicare.

Adding up the self-employment income and salary FICA taxes, Kyle's total FICA tax liability for the year is $3,100 + $725 + $12,152 + $2,842 = $18,819.