Freelancer

⭐️Example of the Self-Employment Tax

⏪For a clearer understanding, consider a freelancer with $50,000 in net earnings from self-employment in one year, and no allowed deductions. ⏩

Here is how to calculate the self-employment tax:

1️⃣ The initial self-employment tax calculation would involve reducing these earnings by 7.65% (to account for the employer portion of Social Security and Medicare), resulting in an adjusted income of $46,175.

2️⃣ The self-employment tax on $46,175 would be 15.3%, equalling approximately $7,065. This amount includes both the Social Security and Medicare portions and represents the tax obligation due from the freelancer for these federal programs.

3️⃣ In this example, the worker does not exceed any of the threshold amounts set by the IRS, so there is no additional amount for the Medicare surtax.

💻Source

🛡Powered by V3V Ventures

Please open Telegram to view this post

VIEW IN TELEGRAM

👍8

www.tg-me.com/us/Freelancer/com.programmer/96

6.99K viewsJun 7, 2024 at 22:59

⭐️Example of the Self-Employment Tax

⏪For a clearer understanding, consider a freelancer with $50,000 in net earnings from self-employment in one year, and no allowed deductions. ⏩

Here is how to calculate the self-employment tax:

1️⃣ The initial self-employment tax calculation would involve reducing these earnings by 7.65% (to account for the employer portion of Social Security and Medicare), resulting in an adjusted income of $46,175.

2️⃣ The self-employment tax on $46,175 would be 15.3%, equalling approximately $7,065. This amount includes both the Social Security and Medicare portions and represents the tax obligation due from the freelancer for these federal programs.

3️⃣ In this example, the worker does not exceed any of the threshold amounts set by the IRS, so there is no additional amount for the Medicare surtax.

💻Source

🛡Powered by V3V Ventures