Answered: Calculate Otto’s self-employment tax…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Julie and Otto are married and file a joint return. They have a young child who needs care while they work. Otto is a self-employed architect but also does some part time work as an Uber driver. From his self-employment he receives $150,000 and from his Uber driving he receives $10,000. They hire a nanny, aged 19 years to watch their child and pay her $190 per week for 40 weeks during the current year (2020).

Required:

Calculate Otto’s self-employment tax
Calculate the employer’s portion of the nanny tax that they should pay
Calculate the nanny’s portion of the tax.

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