Problema Solution
Scott Stewart is the self-employed owner of Stewart Software. His estimated annual earnings are $48,000 and he expects to pay 18% of this amount in income tax. What will be his quarterly estimated tax payment for the second quarter? (For self-employed persons, social security tax is 12.4% of wages up to $106,800, and Medicare tax is 2.9% of all wages.)
Answer provided by our tutors
18% of $48,000 is:
.18(48000)=$8640
Divided into quarterly payments, this will be:
1/4(8640)=$2160
If we take into account Self-Employment Tax (Social Security and Medicare Taxes) only we have
48000(0.124 + 0.029) = $7344
Divided into quarterly payments, this will be:
1/4(7344)=$1836