Question

Angela is a married individual filing a separate return. If she has no wage income and earnings from self-employment of $200,000, her additional Medicare tax liability is ______.

A) $0
B) $675
C) $1,800

Answer 1

Answer:
Angela's additional tax liability will be $0 in this case
Step-by-step explanation:
As Angela is married and filing separately, she will be subject to the Additional Medicare Tax if her self-employment income exceeds $125,000.

The Additional Medicare Tax is 0.9% of wages, self-employment income, and railroad retirement (tier 1) benefits that exceed $200,000 for individuals who file as married filing separately.

Therefore, if Angela has no wage income and $200,000 in earnings from self-employment, her Additional Medicare Tax liability would be:

0.9% x ($200,000 - $200,000) = $0