Juanita is the selfemployed owner of Juanitas Linens Her est

Juanita is the self-employed owner of Juanita\'s Linens. Her estimated annual earnings are $73,040 and she expects to pay 27% of this amount in income tax. What will be her quarterly estimated tax payment for the third quarter? (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.)

Solution

She expects to pay 27% of $73040 in income tax which is = 0.27*73040 =$19720.8
To get quarterly payments, divide this by 4 which is =$19720.8/4=$4930.2
hence her quarterly estimated tax payment for the third quarter =$4930.2

Given that for Self-Employment Tax person, social security tax is 12.4% of wages up to $106,800, and Medicare tax is 2.9% of all wages.
which means =12.4% of 73040 +2.9% of 73040 = 0.124 *73040 +0.029*73040 = $11175.12

to get quarterly payments, Divide this by 4 which is =$111752.8/4=$2793.78
hence her quarterly tax payment for the third quarter =$2793.78