If Carl has $145,000 in self-employment income and $130,000 in wages, how much Additional Medicare Tax is he liable to pay on his self-employment income?

To determine the Additional Medicare Tax liability on self-employment income, it is important to understand how this tax is applied. The Additional Medicare Tax is assessed on income exceeding certain thresholds based on filing status.

For single filers, the threshold is $200,000. In this case, Carl has a total income comprised of both his self-employment income and wages. When calculating his total income, we combine both sources:

• Self-employment income: $145,000

• Wages: $130,000

• Total income: $145,000 + $130,000 = $275,000

Now, to find out how much of his income exceeds the threshold, we see that $275,000 surpasses the $200,000 threshold by $75,000. However, the Additional Medicare Tax is only applied to the income that is classified as self-employment income, which is $145,000 in Carl's case.

The Additional Medicare Tax is applied to the entire amount of self-employment income since it's important to consider that it's not merely the excess over the threshold, but that the tax applies specifically to the self-employment income Carl earned, which is $145,000.

Thus, the correct amount of