Question

Lucinda is a self-employed veterinarian in 2022. Her Schedule C net earnings are $225,000 for the year. Calculate the total amount of Lucinda's self-employment tax liability for 2022.

Answer 1

Lucinda's total self-employment tax liability for 2022 would be $24,978, calculated by summing her Social Security, Medicare, and Additional Medicare taxes based on her net earnings of $225,000.

Step-by-step explanation:

The subject of the question is to calculate the self-employment tax liability for Lucinda, a self-employed veterinarian, based on her net earnings for the year 2022. Self-employment tax consists of two parts, Social Security and Medicare. For 2022, the Social Security tax rate is 12.4% on the first $147,000 of net earnings, and the Medicare tax rate is 2.9% on all net earnings. If her earnings exceed $200,000, there is an additional 0.9% Medicare tax on the excess.

First, we calculate the self-employment tax on the Social Security limit:

• $$147,000 \times 0.124 = $18,228

Then, we calculate the Medicare tax:

• $$225,000 \times 0.029 = $6,525

Finally, we calculate the additional Medicare tax:

• $$25,000 \times 0.009 = $225

Adding these up, Lucinda's total self-employment tax liability for 2022 would be:

• $18,228 (Social Security) + $6,525 (Medicare) + $225 (Additional Medicare) = $24,978