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

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Essay

Sonya started a self-employed consulting business in the last part of the year and earned $40,000.She had been employed as manager in a consulting firm prior to starting her own business and had earned $125,000.
(a)What is Sonya's self employment tax for 2013?
(b)What is Sonya's deduction for AGI for the SE tax?


Definitions:

Form 1040EZ

A simplified federal income tax form for individuals with uncomplicated tax situations, no longer in use after 2018, replaced by the redesigned Form 1040.

Form 1040

The customary Internal Revenue Service (IRS) document utilized by individuals for the purpose of filing their annual earnings tax returns.

Tax Rate Structure

The dividing of taxable income into sections (brackets), each of which is taxed at a different rate.

Progressive

A term used to describe a tax system where the tax rate increases as the taxable income increases.

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