4.5 Federal Self-Employment Taxes

An easy way to know if you will be taxed as a self-employed individual is:

• to observe how others in the same line of work are taxed

• whether you receive a W2 or a W4

• whether you receive W2 or a Form 1099 MISC

• whether you receive a W4 or a Form 1099 MISC

Self-employment tax consists of:

• a special tax assessed only on self-employed individuals

• taxes that employees and employers also pay

• taxes designed to benefit large corporations

• all taxes paid by self-employed individuals

Social Security and Medicare taxes are paid by:

• employers

• employees

• self-employed individuals

• employers, employees, and self-employed individuals

The total Social Security tax rate is ____, half of which is paid by the employers and half by the employee (or all paid by the self-employed individual).

• 6.20%

• 7.65%

• 12.40%

• 15.30%

The self-employment tax rate is made up of the Social Security portion, which is ___, and the Medicare portion, which ___

• 6.2%, 7.65%

• 1.45%, 6.2%

• 1.45%, 7.65%

• 6.2%, 1.45%

If you are self-employed, one way to avoid a penalty from the IRS is to:

• owe less than $1,000 when you file your federal income tax return

• make correct and on-time estimated tax payments

• be sure to pay all taxes owed by April 15 of the following year

• both owe less than $1,000 when you file your federal income tax return and make correct and on-time estimated tax payments

Estimated self-employment taxes should be paid:

• monthly

• quarterly

• semiannually

• annually

If your tax base for self-employment earnings exceeds $128,400 in 2018, then the self-employment tax rate on the portion of earnings more than $128,400 is:

• 15.3%

• 12.4%

• 7.65%

• 2.90%

Jeff drives for a ride-sharing company in the evenings to earn some extra money to pay for college. Jeff's net earnings from self-employment work were $4,000. If this is Jeff's only income, what is his self-employment tax?

• $565

• $612

• $0

• $458

Ben delivers pizza to earn some extra money to pay for college. If Ben's self-employment tax is $1,500, how much of it can he deduct as FOR AGI deduction?

• $1,500

• $1,000

• $750

• $0