1-2b Employment Taxes

Question 0

Self- employment tax

Answer 0

• taxed at 15.3 on self-employment income up to $117,000 and then it’s 2.9 on all additional self-employment income
• self-employed individuals can deduct half from self-employment tax as a business expense

Question 1

FICA TAX

Answer 1

• social security: 6.2 for employee 6.2 for employer
  ~> $117,000 cap for 2014
• Medicare: 1.45 for employee 1.45 for employer
  ~> an additional .9 for earned income above $200,000 (single filers) or $250,000 (married filing jointly) [employer does not match this amount]
  ~~> an additional 3.8 for people’s investment income exceeding $200,000 (single filers) or $250,000 (married)

Question 2

Unemployment taxes

Answer 2

• imposed only on employer
• 6% on the first $7,000 of covered wages paid during the year to each employee
• employers must file Form 940