Use the following tax rates, ceiling and maximum taxes Employee and Employer OASDI 6 20 $147,000 $9,114 00 Employee and Employer HI 1 45 No limit No maximum Self employed OASDI 12 4 $147,000 $18,228 00 Self employed HI 2 9 No limit No maximum Employee HI Plus an additional 0 9 on wages over $200,000 Also applicable to self employed Rounding Rules Unless instructed otherwise compute hourly rate and overtime rates as follows Carry the hourly rate and the overtime rate to 3 decimal places and then round off to 2 decimal places (round the hourly rate to 2 decimal places before multiplying by one and one half to determine the overtime rate) If the third decimal place is 5 or more, round to the next higher cent If the third decimal place is less than 5, drop the third decimal place Also, use the minimum hourly wage of $7 25 in solving these problems and all that follow Ralston is the sole proprietor of Cut Curl During the year, his net earnings were $79,700 What are his self employment taxes (OASDI and HI) on these earnings Round your answer to the nearest cent

The Answer is in the image, click to view ...

Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Aug 05, 2024

Use the following tax rates, ceiling and maximum taxes: Employee and Employer OASDI: 6.20% $147,000 $9,114.00 Employee* and Employer HI: 1.45% No limit No maximum

Use the following tax rates, ceiling and maximum taxes:
Employee and Employer OASDI:	6.20%	$147,000	$9,114.00
Employee* and Employer HI:	1.45%	No limit	No maximum
Self-employed OASDI:	12.4%	$147,000	$18,228.00
Self-employed HI:	2.9%	No limit	No maximum

*Employee HI: Plus an additional 0.9% on wages over $200,000. Also applicable to self-employed.

Rounding Rules: Unless instructed otherwise compute hourly rate and overtime rates as follows:

Carry the hourly rate and the overtime rate to 3 decimal places and then round off to 2 decimal places (round the hourly rate to 2 decimal places before multiplying by one and one-half to determine the overtime rate).
If the third decimal place is 5 or more, round to the next higher cent.
If the third decimal place is less than 5, drop the third decimal place.

Also, use the minimum hourly wage of $7.25 in solving these problems and all that follow.

Ralston is the sole proprietor of Cut & Curl. During the year, his net earnings were $79,700. What are his self-employment taxes (OASDI and HI) on these earnings?Round your answer to the nearest cent.