Question

Noor is a self-employed event planner who has net earnings

(profit) from the business of $66,400. What are the self-employment
taxes for the year?

Answer 1

The self-employment taxes for the year can be calculated by considering the Social Security and Medicare taxes, also known as the self-employment tax. The self-employment tax is 15.3% of your net earnings from self-employment. Therefore, the self-employment taxes for Noor would be $10,147.20.

Step-by-step explanation:

The self-employment taxes for the year can be calculated by considering the Social Security and Medicare taxes, also known as the self-employment tax.

The self-employment tax is 15.3% of your net earnings from self-employment. This tax is made up of two parts:

1. The Social Security tax is 12.4% of your net earnings up to a certain limit, which is $137,700 for the year 2020 (this limit is adjusted annually).
2. The Medicare tax is 2.9% of all your net earnings, with no income limit.

To calculate the self-employment taxes for Noor, we can use the following formula:

Self-Employment Taxes = Net Earnings x 15.3%

Therefore, the self-employment taxes for Noor would be $66,400 x 0.153 = $10,147.20.