childcare credit for one qualified children is 3000 and for two or more maximum utpo 6,000

cost =300,000

useful life =3 years

dep value =300,000/3=100,000

note: it is assumed that it does not claim bonus dep and dep under sec 179

Solution

Q.5

FICA tax invoice consist both Social security taxes and Medicare taxes

In case of self-employed person required to pay contribution of each employee and employer.
Which is 12.4% social security tax up to $137,700 of net earnings.

And Medicare tax 2.9% of entire earnings

In case of employee social security tax required to pay is 6.2% each by employee and employer
up to the net earnings of$137,700 and Medicare tax which is 1.45% of entire income.

In this case Jerry works an employee for an accounting firm, earns $110000 as an employee,

Therefore, Social security tax and Medicare tax which is 7.65%(6.2+%1.45%) will withhold by
employer.

And Jerry earned $100000 from self-employed business therefore he is required to pay 15.3%
(social security tax-12.4 & Medicare tax -2.9%)

$1,00,000×15.3%= $15300

And additional Medicare tax at 0.9% applicable if maximum earnings from wages, self-
employment is exceeding $200000.

Therefore, additional Medicare tax is= 0.9% × $10000 (110000+ 100000 - $200000)

=$90.

Total tax =$15300+$90=$15390.