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

question 67

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

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Definitions:

Larger Output

Refers to the increased production of goods or services by a company or economy.

Fixed Amounts

Predetermined quantities or sums that do not change over time or in response to varying conditions.

Trade by Bartering

A method of exchanging goods or services directly without using money.

Laissez-Faire

Laissez-faire is an economic philosophy advocating for minimal government intervention in the market, with transactions between private parties being free from tariffs, subsidies, and enforced monopolies.