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Lara Started a Self-Employed Consulting Business in the Last Part

question 27

Essay

Lara started a self-employed consulting business in the last part of the year and earned $60,000 of net self- employment income.She had been employed as manager in a consulting firm prior to starting her own business and had earned $175,000.
(a)What is Lara's Additional Medicare Tax for 2013,if any?
(b)What is Lara's deduction for AGI for the Additional Medicare Tax?


Definitions:

Fisher Effect

The one-for-one adjustment of the nominal interest rate to the inflation rate

Inflation

A sustained increase in the general price level of goods and services in an economy over time, leading to a decrease in the currency's purchasing power.

Nominal Interest Rate

The stated interest rate without adjustment for inflation, representing the actual percentage paid or earned.

Open Market Sales

Operations by a central bank to sell securities in the open market to decrease the money supply in the economy.

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