For Taxpayers Who Receive Both Salary as an Employee and Self-Employment

question 157

Multiple Choice

For taxpayers who receive both salary as an employee and self-employment income as an independent contractor in the same year, which of the following statements regarding FICA and self-employment taxes is most accurate?

• A)The Social Security limit applies to the salary but not to the self-employment income.
• B)The Social Security limit applies to the self-employment income but not to the salary.
• C)Salary is first applied against the Social Security limit and then self-employment income is applied against the Social Security limit.
• D)Self-employment income is first applied against the Social Security limit and then salary is applied against the Social Security limit.

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Definitions:

Fertilized Egg

A fertilized egg, or zygote, is the result of the fusion of a human egg and sperm, marking the beginning of human development.

Germinal Period

The initial two weeks of prenatal development after conception, characterized by rapid cell division and the beginning of cell differentiation.

Conception

The mental process of forming ideas or notions.

Chromosomes

Structures within cells that contain genetic information (DNA) necessary for the replication and function of organisms.