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:

Operating System

The software that manages a computer's hardware and software resources, providing common services for computer programs.

ROM

Read-Only Memory, a type of non-volatile storage that is primarily used to store firmware or application software in electronic devices.

RAM

Short for Random Access Memory, a type of computer memory that can be accessed randomly and is used for storing the working data and machine code currently being used.

FORTRAN

A high-level programming language used primarily for numerical and scientific computing, known for its efficiency in the areas of complex mathematical calculations.