If Frank has a flow-through of net income from a general partnership of $190,000, what is the amount of self-employment tax he must pay?

If Frank has a flow-through of net income from a general partnership of $190,000, what is the amount of self-employment tax he must pay?

• A. $25,995
• B. $23,217
• C. $23,295
• D. $23,643

Answer: (A)

To determine the self-employment tax that Frank must pay on his income from a general partnership, the process involves calculating the tax based on the net income he receives. In the case of partnerships, each partner is typically considered to be self-employed for tax purposes. The self-employment tax rate is currently set at 15.3%, which consists of two parts: 12.4% for Social Security taxes and 2.9% for Medicare taxes. However, only a certain portion of income is subject to the Social Security component due to annual income limits. To calculate Frank's total self-employment tax, we assume that the $190,000 constitutes his entire self-employment income. The entire amount is subject to the Medicare portion, but only the first $160,200 (as of 2023) is subject to the Social Security portion. 1. Calculate the Social Security tax: - On the first $160,200, Frank pays 12.4%: - $160,200 x 0.124 = $19,888.80 2. Calculate the Medicare tax: - On the $190,000, Frank pays 2.9%: - $190,000 x 0

To determine the self-employment tax that Frank must pay on his income from a general partnership, the process involves calculating the tax based on the net income he receives. In the case of partnerships, each partner is typically considered to be self-employed for tax purposes.

The self-employment tax rate is currently set at 15.3%, which consists of two parts: 12.4% for Social Security taxes and 2.9% for Medicare taxes. However, only a certain portion of income is subject to the Social Security component due to annual income limits.

To calculate Frank's total self-employment tax, we assume that the $190,000 constitutes his entire self-employment income. The entire amount is subject to the Medicare portion, but only the first $160,200 (as of 2023) is subject to the Social Security portion.

1. Calculate the Social Security tax:

• On the first $160,200, Frank pays 12.4%:

• $160,200 x 0.124 = $19,888.80

2. Calculate the Medicare tax:

• On the $190,000, Frank pays 2.9%:

• $190,000 x 0