Laurie is self employed and expects to make $96,000. She expects to pay 12.4%, 2.9%, and 25% in taxes. What is Laurie's expected tax payment for the fourth quarter?
12.4 + 2.9 + 25 = 40.3% = 0.403
(0.403 * 0.403) / 0.25 = ?
So, I multiply 0.403 w/0.403 and then divide by 0.25?
Okay, I tried that but the answer doesn't give me a whole number, it gives me a decimal...0.6496. That doesn't appear like an amount she would owe. Am I doing it wrong?
To calculate Laurie's expected tax payment for the fourth quarter, we first need to determine the total amount of taxes she will owe for the year.
Let's break it down step by step:
1. Calculate the Social Security tax: Laurie is required to pay 12.4% of her income for Social Security tax. So, the Social Security tax amount is (12.4/100) * $96,000.
Calculation: (12.4/100) * $96,000 = $11,904
2. Calculate the Medicare tax: Laurie needs to pay 2.9% of her income for Medicare tax. The Medicare tax amount is (2.9/100) * $96,000.
Calculation: (2.9/100) * $96,000 = $2,784
3. Calculate the income tax: Laurie expects to pay 25% of her income as income tax. The income tax amount is (25/100) * $96,000.
Calculation: (25/100) * $96,000 = $24,000
4. Calculate the total tax owed: Add up the Social Security tax, Medicare tax, and income tax.
Calculation: $11,904 + $2,784 + $24,000 = $38,688
Now that we have calculated the total tax owed for the year, we can determine the expected tax payment for the fourth quarter. Assuming the same tax rate applies for all four quarters, we divide the annual tax owed by 4.
Calculation: $38,688 / 4 = $9,672
Therefore, Laurie's expected tax payment for the fourth quarter is $9,672.