JC recently graduated from veterinary school and opened her own professional practice. Assume JC does not qualify for the QBI deduction. This year, her net profit was $22,600. Compute JC’s after-tax income from her practice assuming her self-employment tax is $3,193, and her marginal income tax rate is 22 percent. What percentage of the federal tax burden on JC’s business income is represented by the self-employment tax?

Net profit =$22,600,

One-half- self employment tax= $1,596.5,

Taxable Income from Practice= $21,003.5,

Tax rate = 22%

Income tax = $4,620.77 ,

Total income after tax = $14,786.23

Explanation:

We obtain JC's net profit ($22,600) from the question, the one-half- self employment tax ($1,596.5) is gotten by dividing the self employment tax by 2 (3193/2). A subtraction of the one half self employment tax from the Net profit to get the Taxable Income from Practice (22,600-1596.5). Using the tax rate of 22% of Taxable Income from Practice (22% × 21003.5) we obtain the Income tax of $4,620.77 .

Subtracting the self-employment tax is $3,193 + Income tax = $4,620.77 (=7813.77)  from the Net profit ($22,600) we get $14,786.23 as the Total income after tax.

14% percent of the federal tax burden on JC’s business income is represented by the self-employment tax. ( = 14 ).

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