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1. Baily owns and operates Ben’s Red Truck Shop (BRT), which is a sole proprietorship. She has selfemployment income of $150,000. How much self-employment tax does she owe ? $21,092. $21,194. $22,194. $2 2,950. Answer: $21,092 Explanation: MEDICARE TAX RATE Employer: 1.45% Employee: 1.45% Therefore, a self-employed worker will be taxed 1.45% + 1.45% = 2.9% The total self-employment tax rate is 12.4%. Therefore, 12.4% + 2.9% = 15.3% Baily (self-employed) having net income of exactly $150,000 Self-employment tax rate $150,000* 92.35% =$138,525 The security wage base $137,700 $138,525*15.3%= $21,194.325 Social security tax = Lower of 137700 or 12.4 % = 137,700* 12.4 % = $ 17074.8 $137,700*2.9%= $4,017.23

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