Scenario 2: Partially Exceeds the Cap Scenario 2: A portion of earnings to date and current earnings, when combined, exceed the wage cap. Sydney, OASDI Example 2, has earnings to date of $136,500 and current wages of $4,000. To determine how much of her current earnings will be subject to OASDI, add earnings to date and current wages, $136,500 + $4,000 = $140,500. Then subtract from this the OASDI cap, $140,500 - $137,700 = $2,800. This amount exceeds the OASDI cap and is not subject to tax. To determine the amount to tax, begin with current wages and subtract the amount that exceeds the cap ($4,000 - $2,800 = $1,200). This amount ($1,200) of current earnings is under the cap and taxed at the OASDI rate of 6.2% or $74.40. Tackle It Note: Round to the nearest cent. Michael Jordan has earned to date $132,000 and has current earnings of $7,260.00. Employee: Jordan, Michael Earnings to Date: $132,000.00 Current Earnings: $7,260.00 OASDI Withholding: Scenario 5: SECA SECA: Self-Employed Contributions Act In 1951, the Self-Employment Contributions Act (SECA) extended coverage under the social security system to the self-employed. SECA uses an individual's self-employment income as the basis for levying taxes and for determining the amount of income to credit toward OASDI insurance benefits or HI coverage. Self-employment income generally consists of the net earnings derived by individuals from a business or profession carried on as a sole proprietorship or as a partnership. Self-employed persons determine their net earnings by finding the sum of the following: a. Gross income b. Distributive share Tackle It Using the information provided here and in your text, complete the following: 1. Gross income is defined as income derived from any business or profession carried on by the individual, less allowable deductions. 2. Whether or not distributed , the distributive share is the ordinary net income or loss from any business or profession carried on by a partnership 3. The self-employed OASDI tax rate for 2020 is 0.124 in decimal format or 12.4 % in percentage format. 4. The self-employed HI tax rate for 2020 is 0.029 in decimal format or 2.9 % in percentage format. 5. Self-employment income is subject to a supplemental Hi tax of % for earned income in excess of $ 200,000 for individuals whose filing status is Single. 6. True or False: If the individual is also an employee of another company, the wages received will not reduce the amount of self-employment income that is taxed for OASDI. False 7. Earnings of less than $ 400 from self-employment are ignored. Note: Round each to the nearest cent and if an amount is zero, enter "0". 1. Bode has cumulative earnings of $59,200. His current earnings are $3,256.00. 201.87 Bode's 2020 OASDI withholding is: $ And his 2020 HI withholding is: $ 2. Dale's current earnings total a gross amount of $7,172.00. Year to date he has earnings of $130,400. Dale's 2020 OASDI withholding is: $ And his 2020 HI withholding is: $ Medal Points Did Dale's gross earnings partially exceeded the OASDI cap? Yes 3. Brandi's current earnings total a gross amount of $10,945. Year to date earnings are $199,000. Brandi's 2020 OASDI withholding is: $ And her 2020 total HI withholding is: $ Compute the total annual tax for the following individuals. Note: Round each to the nearest cent. 1. Alex has self-employment earnings of $51,200. Alex's 2020 total self-employment taxes are: 2. Hope has self-employment earnings of $139,200. Hope's 2020 total self-employment taxes are: $ 3. Michelle has self-employment earnings of $227,000. Michelle's 2020 total self-employment taxes are: $ Compute the following for Greg, who is both an employee and self-employed. Note: Round the answer to the nearest cent. Greg was employed by the PGA, earning for the year $123,000. In addition, during his free time, he sold golf balls out of his home, earning $38,000 for the year. Greg's 2020 total FICA and SECA taxes for the year is: $