Question

Eva received $67,000 in compensation payments from JAZZ Corp. during 2018. Eva incurred $13,000 in business expenses relating to her work for JAZZ Corp. JAZZ did not reimburse Eva for any of these expenses. Eva is single and she deducts a standard deduction of $12,000. Based on these facts answer the following questions: Use Tax Rate Schedule for reference.

Assume that Eva is considered to be a self-employed contractor. What is her regular tax liability for the year?

Answer 1

Answer: $7,630

Step-by-step explanation:

Given the following :

Gross compensation = $67,000

Incurred expenses = $13,000

Standard deduction = $12,000

The percentage of an individual's self employment earning subject to tax is 92.35% of the individual's self net earning. With 15.3% of these percentage being the individual's self employment tax liability.

From the question above,

Net self employment income :

General compensation - Expenses

$67,000 - $13,000 = $54,000

Taxable percentage of Net self employment income :

$54,000 × 92.35% = $49,869

Self employment tax liability :

49,869 × 15.3% = $7629.957

=$7,630