Eva (Gaytor's friend) received $60,000 in compensation payments from JAZZ Corp. during 2019. Eva is a single individual and she incurred $5,000 out of pocket business expenses relating to her work for JAZZ, Corp. JAZZ (business travels, meeting expense, etc) did not reimburse Eva for any of these expenses. Eva is single and she deducts a standard deduction of $12,200. Based on these facts answer the following questions:

1. If Eva has an option, would you (the tax advisor) advise Eva choose to be an employee or as an independent contractor? How does "accounting period" and "other taxes" concept discussed plays a role of your decision? Don't give me an existential reason, but show me the money. We are in tax class....give me a business/tax reason.
2. Support your answer by calculating tax as though Eva is an employee (easier) or as a self-employed individual (more challenging). Copy the area in colored table, below. Also, comment by model. Is the provided assumption and template here provides a good guide or is there points to consider to improve this model. (hint: is $5,000 business expense an under-estimate figure?).

2a. OPTION 1 - EVA AS EMPLOYEE

• Assume that Eva is considered to be an employee. What amount of FICA taxes is she required to pay for the year? Note this tax will be paid through the deductions of W2.
• Assume that Eva is considered to be an employee. What is her regular income tax liability for the year? **

2b. OPTION 2 - EVA AS SELF-EMPLOYED CONTRACTOR

• Assume that Eva is considered to be a self-employed contractor. What is her self-employment tax liability and additional Medicare tax liability for the year? **
• Assume that Eva is considered to be a self-employed contractor. What is her regular tax liability for the year? **

**feel free to use the following calculation step to help you calculate. copy and paste, then try to fill in the amount. I built in some hints for you.

OPTION 2A - EVA AS EMPLOYEE

DESCRIPTION	AMOUNT	EXPLANATION (if any)
(1) Salary
(2) FICA taxes of employee-only portion	7.65%
(3) FICA tax deducted from her paycheck - (1) * (2)
Payroll [FICA] tax liability
(1) Salary
(2) Standard deduction
(3) Taxable income - (1) + (2)
Regular tax liability

OPTION 2B - EVA AS INDEPENDENT CONTRACTOR

DESCRIPTION	AMOUNT	EXPLANATION (if any)
(1) Gross self-employment compensation
(2) Business expenses
(3) Net self-employment (Schedule C) income (1) + (2)
(4) Percentage of self-employment income subject to self-employment tax	92.35%
(5) Earnings from self-employment (3) (4)
(6) Self-employment tax rate	15.3%
(7) Self-employment [ FICA] tax liability (5) (6)
(1) Gross self-employment compensation
(2) Business expenses
(3) Net self-employment (Schedule C) income (1) + (2)
(4) For AGI deduction for employer portion of self-employment taxes
(5) AGI = (3) + (4)
(6) Standard deduction
(7) 20 percent deduction for qualified business income
Taxable income = (5) + (6)+ (7)
Regular tax liability