Which tax component for self-employed individuals is 2.9%?

Which tax component for self-employed individuals is 2.9%?

• A. Self-employed tax
• B. Social Security tax for self-employed
• C. Net pay
• D. Medicare tax for self-employed

Answer: (D)

Self-employed individuals pay a combined self-employment tax to cover Social Security and Medicare. The total rate is 15.3%, made up of 12.4% for Social Security and 2.9% for Medicare. The 2.9% portion is specifically the Medicare tax for self-employed. There can be an extra 0.9% Medicare tax for high earners, but that applies only above certain income levels. The Social Security portion (12.4%) stops at the wage base, so that boundary doesn’t apply to the 2.9% Medicare portion. The other options don’t fit because they point to either the Social Security portion or to take-home pay, not the Medicare portion of the self-employment tax.

Self-employed individuals pay a combined self-employment tax to cover Social Security and Medicare. The total rate is 15.3%, made up of 12.4% for Social Security and 2.9% for Medicare. The 2.9% portion is specifically the Medicare tax for self-employed. There can be an extra 0.9% Medicare tax for high earners, but that applies only above certain income levels. The Social Security portion (12.4%) stops at the wage base, so that boundary doesn’t apply to the 2.9% Medicare portion. The other options don’t fit because they point to either the Social Security portion or to take-home pay, not the Medicare portion of the self-employment tax.