Bill owns 100% of an S corporation. In 2016, the corporation paid Bill a salary of $100,000. Bill’s share of S corporation income for the year was $42,000. Assuming this is Bill’s only income for 2016.
Assume the Social Security rate is 6.2% and Medicare rate is 1.45%. If an amount is zero, enter "0". If required, round your answers to nearest dollar.
a. What amount that Bill received is subject to payroll taxes? $100,000 To self-employment taxes? $_________ (not $42,000 or $3213)
b. Compute Bill’s payroll and self-employment income taxes. Bill’s payroll taxes: $7,650 Self-employment income taxes: $_________ (not $3,213 or $4099)