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In 2023, Miranda records net earnings from self-employment of $198,200. She has no other income. Determine the amount of Miranda's self-employment tax and her AGI income tax deduction. In your computation:
a) Self-employment tax: $28,059.20; AGI income tax deduction: $99,101
b) Self-employment tax: $28,059.20; AGI income tax deduction: $198,200
c) Self-employment tax: $39,275.20; AGI income tax deduction: $99,101
d) Self-employment tax: $39,275.20; AGI income tax deduction: $198,200

Respuesta :

To calculate Miranda's self-employment tax and AGI income tax deduction, we'll follow the standard formulas and thresholds for the tax year 2023.

1. **Self-Employment Tax Calculation:**
- Miranda's net earnings from self-employment are $198,200.
- The self-employment tax rate for 2023 is 15.3%.

Self-Employment Tax = Net Earnings from Self-Employment * 0.153

Self-Employment Tax = $198,200 * 0.153 = $30,333.60

2. **AGI Income Tax Deduction Calculation:**
- The AGI (Adjusted Gross Income) income tax deduction is calculated as half of the self-employment tax paid.

AGI Income Tax Deduction = Self-Employment Tax / 2

AGI Income Tax Deduction = $30,333.60 / 2 = $15,166.80

None of the provided options match the computed values exactly, but option C is closest to the calculated values:
c) Self-employment tax: $39,275.20; AGI income tax deduction: $99,101

However, the correct self-employment tax should be $30,333.60, not $39,275.20. Therefore, none of the provided options are correct based on the calculations.

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