Self-Employment Tax Question

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    Topic
  • November 5, 2015 at 3:57 am #198007
    kaydun
    Participant

    Probably a stupid question, but I can’t really find a good explanation in the Becker book

    Can someone explain the steps for calculating net earnings from self employment and the self-employment tax? I’m confused as to why net earnings from self employment = income * (1-.0765) and why self employment tax = the net earnings from self employment * (0.0765*2).

    I get that the doubling of the rate has to do with paying the employer side and employee side, but why use net earnings and not the total income?

    (This question stems from a practice sim in R1)

    FAR - 76 Oct 2015 (Becker)
    REG - 87 Apr 2016 (Becker + Ninja MCQ) - 3rd time's the charm!
    AUD - 82 Feb 2016 (Becker)
    BEC - 85 May 2016 (Becker)

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