Explain most favorable ordering of income for the taxpayer

Reference no: EM133320585

Question: When a taxpayer receives both employee compensation and self-employment earnings in the same year, the calculation of Social Security taxes is more complicated. Explain the most favorable ordering of income for the taxpayer to satisfy the combined (employment and SE earnings) SS wage base limit. Explain the impact of this ordering on the amount of tax that would be calculated. The understanding of this concept is paramount to the avoidance of overpayment of the Social Security tax component and is critical to your correct calculation of the employment and self-employment tax

Reference no: EM133320585

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