compute Sun Jung's estimated tax payment for the second quarter. She is self-employed and she expects to earn $61,760 this year. Her estimated income tax rate is 23%. For self-employed persons, social security tax is 12.4% of wages up to $106,800, and Medicare tax is 2.9% of all wages.
To compute Sun Jung's estimated tax payment for the second quarter, we need to calculate both the income tax and the self-employment taxes (social security and Medicare).
1. Start by calculating the income tax:
- Multiply Sun Jung's expected annual income ($61,760) by the estimated income tax rate (23%): $61,760 * 0.23 = $14,228.80
- This gives us her estimated income tax for the year.
2. Next, calculate the self-employment taxes:
- The social security tax is 12.4% of wages up to a certain limit. In 2021, the limit is $106,800.
- Multiply Sun Jung's expected annual income ($61,760) by the social security tax rate (12.4%): $61,760 * 0.124 = $7,649.44
- This gives us the social security tax for the year, up to the income limit.
- The Medicare tax is a flat rate of 2.9% on all wages.
- Multiply Sun Jung's expected annual income ($61,760) by the Medicare tax rate (2.9%): $61,760 * 0.029 = $1,789.44
- This gives us the Medicare tax for the year.
3. Compute the estimated tax payment for the second quarter:
- Divide the estimated taxes for the year (income tax + social security tax + Medicare tax) by 4 to get the quarterly amount: ($14,228.80 + $7,649.44 + $1,789.44) / 4 = $23,667.68 / 4 = $5,916.92
- This gives us Sun Jung's estimated tax payment for the second quarter.
Therefore, Sun Jung's estimated tax payment for the second quarter is $5,916.92.