Question

jessica is an ordained minister. jessica's salary from her employing church last year was $52,000. the church did not designate any of her salary as housing allowance. jessica spent $12,400 to rent her home last year. how much of jessica's salary must be included when figuring net income for self-employment tax?

Answer 1

When calculating net income for self-employment tax, all of Jessica's salary must be included, regardless of whether or not the church designated any of it as housing allowance.

Step-by-step explanation:

When calculating net income for self-employment tax, all of Jessica's salary must be included, regardless of whether or not the church designated any of it as housing allowance. This is because housing allowance is exempt from self-employment tax, but since Jessica did not receive any housing allowance, her entire salary is subject to the tax.

Jessica's salary from her employing church last year was $52,000, and she spent $12,400 to rent her home. Thus, her net income for self-employment tax would be:

1. Calculate the net income:

1. Net income = Salary - Housing allowance
2. Net income = $52,000 - $0 (since there was no housing allowance)
3. Net income = $52,000

1. Calculate the self-employment tax:

1. Self-employment tax = Net income x Self-employment tax rate
2. Self-employment tax = $52,000 x 0.153 (the self-employment tax rate)
3. Self-employment tax = $7,956

Therefore, Jessica would need to include her entire salary of $52,000 when figuring net income for self-employment tax.