Example 3-5 Taylor Talbot receives wages amounting to $129,800. Their net earnings from self-employment amount to $32,800. Talbot must

Example 3-5

Taylor Talbot receives wages amounting to $129,800. Their net earnings from self-employment amount to $32,800. Talbot must count $30,400 of their earnings in determining taxable self-employment income for OASDI taxes.

OASDI Taxable Wage Base

Wages Received

=

OASDI Taxable Self−Employment Income

$160,200

$129,800

=

$30,400

Ralph Henwood was paid a salary of $80,400 during 20– by Odesto Company. In addition, during the year, Henwood started his own business as a public accountant and reported a net business income of $68,500 on his income tax return for 20–. Compute the following:

a.   The amount of FICA taxes that was withheld from his earnings during 20– by Odesto Company.

Line Item Description

Amount

OASDI

fill in the blank 1 of 2$

HI

fill in the blank 2 of 2$

b.   Henwood’s self-employment taxes on the income derived from the public accounting business for 20–.

Line Item Description

Amount

OASDI

fill in the blank 1 of 2$

HI

fill in the blank 2 of 2$

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