Question

Mario a self-employed baseball coach. During 2020, his net earnings from self- employment were $175,000. What is Mario's Medicare (HI) tax for 2020?

Note: The Social Security Wage base in 2020 was $137,700.
Select one:
a. $20,459.56
b. $21,761.56
c. $4,686.76
d. $5,075

Answer 1

Mario, a self-employed baseball coach with net earnings of $175,000, would pay a 2.9% Medicare tax, which totals $5,075 for 2020 since he is responsible for both the employee and employer portions.

Step-by-step explanation:

The student is asking how to calculate the Medicare (HI) tax for Mario, a self-employed baseball coach, who had net earnings of $175,000 in 2020. To compute this, we need to recognize that Medicare tax for self-employed individuals is set at 2.9%. Since he is self-employed, he is responsible for both the employee and employer portions of the Medicare tax, amounting to the full 2.9% without any wage ceiling. Therefore, his Medicare tax for 2020 would be 2.9% of $175,000, which is $5,075.