What is Raphael's self-employment tax for the current year?

To determine Raphael's self-employment tax for the current year, it is important to understand how the self-employment tax is calculated. The self-employment tax is composed of Social Security and Medicare taxes for individuals who work for themselves. The tax rate for self-employment tax is currently 15.3%, which consists of 12.4% for Social Security and 2.9% for Medicare.

The self-employment tax is calculated based on the net earnings from self-employment, which is generally determined by subtracting any business expenses from gross income. For self-employed individuals, only 92.35% of net earnings is subject to self-employment tax.

When calculating the self-employment tax, we first take the net earnings and multiply it by 92.35% to find the portion that is taxed. Next, we apply the 15.3% tax rate to that figure. If the net earnings exceed a certain threshold (which was $147,000 for 2022, for example), the Social Security portion is capped, but the Medicare portion continues on all earnings.

If the self-employment tax calculation yields $7,771, this would suggest that the net earnings were structured in such a way that, after