Andrea Is An Employee Of Fern Corporation And Single She Also Has Her Own Busine

Andrea is an employee of Fern Corporation and single. She also has her own business working as a life coach. For 2018, Andrea’s wages from Fern were $210,000. Her self-employment income was $30,000 (line 4, Form SE, based on 92.35% of net earnings as a life coach).

If required, round any computations to two decimal places. Round final answers to the nearest dollar.

a. Compute the payroll, self-employment, and additional Medicare taxes for Andrea for 2018.

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Payroll (employment) taxes can be a significant cost for a business and its owners. Such costs can be classified into two categories: (1) FICA taxes (Social Security and Medicare) and (2) Self-employment tax.

b. Assume the same facts except that Andrea’s 2018 self-employment activities resulted in a loss of $15,000. Compute the payroll, self-employment, and additional Medicare taxes for Andrea for 2018.

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Incorrect

c. Compute Andrea’s NIIT for 2018 using wages of $210,000, self-employment income of $30,000 and NII of $20,000. There are no expenses allocable to any investment income.

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