Acc 456 Short Answered Questions
Short Answer Questions
ACC 456
August 27, 2012
Short Answer Questions · What constitutes self-employment income? What are the requirements for estimated tax payments by self-employed individuals? Individuals who work for themselves and make money to do so constitute as self-employment income. Independent contractors and sole proprietors are considered self-employed. They receive all payment without withholding any Social Security tax, Medicare tax, state tax, and etc. They do however have self-employment tax, which is taken out when the individual file Schedule C or C-EZ on their tax return. They would also need to file a Schedule SE. As of 2011, self-employment tax is 13.3% of the individual’s net earnings. Of that self-employment tax, 10.4% of it is for Social Security and 2.9% of it is for Medicare. The requirements for estimated tax payments by self-employed individuals are that the individual most have a net income equal to or more than $400. Also making quarterly payments is may be needed (Form 1040ES) also. Individuals who makes the estimated quarterly payments, is paying the IRS the taxes they owe from their income. The first payment is usually due on the last day of tax season, the second is due two months after the first payment was due, the third is due three months after the second payment was due and the fourth is due after third payment was due. For example: • First payment is due April 17th • Second payment is due June 15th • Third payment is due September 17th • Fourth payment is due January 15th
· Describe two of the various personal tax credits. What are the requirements to qualify for the credit? The Pre-2005 state death tax credit is one of the many tax credits that apply less often than the unified credit. Specifically, prior to 2005 jurisdictions would impose a state death tax equal to the credit allowed on the federal return for death taxes. As a result,
ACC 456
August 27, 2012
Short Answer Questions · What constitutes self-employment income? What are the requirements for estimated tax payments by self-employed individuals? Individuals who work for themselves and make money to do so constitute as self-employment income. Independent contractors and sole proprietors are considered self-employed. They receive all payment without withholding any Social Security tax, Medicare tax, state tax, and etc. They do however have self-employment tax, which is taken out when the individual file Schedule C or C-EZ on their tax return. They would also need to file a Schedule SE. As of 2011, self-employment tax is 13.3% of the individual’s net earnings. Of that self-employment tax, 10.4% of it is for Social Security and 2.9% of it is for Medicare. The requirements for estimated tax payments by self-employed individuals are that the individual most have a net income equal to or more than $400. Also making quarterly payments is may be needed (Form 1040ES) also. Individuals who makes the estimated quarterly payments, is paying the IRS the taxes they owe from their income. The first payment is usually due on the last day of tax season, the second is due two months after the first payment was due, the third is due three months after the second payment was due and the fourth is due after third payment was due. For example: • First payment is due April 17th • Second payment is due June 15th • Third payment is due September 17th • Fourth payment is due January 15th
· Describe two of the various personal tax credits. What are the requirements to qualify for the credit? The Pre-2005 state death tax credit is one of the many tax credits that apply less often than the unified credit. Specifically, prior to 2005 jurisdictions would impose a state death tax equal to the credit allowed on the federal return for death taxes. As a result,