Self-employment tax applies to:

A W-2 employees only

B Net self-employment income (covers Social Security and Medicare for self-employed)

C Retirement income

D Investment income

✓ Correct Answer: Option B

Self-employment tax is the SE equivalent of FICA, covering Social Security (12.4%) and Medicare (2.9%).

💡 Why is B) the correct answer?

The correct answer to the question "Self-employment tax applies to:" is Option B: Net self-employment income (covers Social Security and Medicare for self-employed).

The other options — A) W-2 employees only, C) Retirement income, D) Investment income — are incorrect for this CPA Exam Prep question. As explained above: Self-employment tax is the SE equivalent of FICA, covering Social Security (12.4%) and Medicare (2.9%).

📚 About This CPA Exam Prep Practice Question

This 2-level CPA Exam Prep question from the Regulation (REG) topic is part of BrainForge Quiz's free exam preparation library. Each question includes the correct answer and a detailed explanation to help you understand the underlying concept, not just memorize the answer.

How to use this page: Read the question above, consider all four options (A through D), then check the highlighted correct answer and explanation. For active timed practice, start a free CPA Exam Prep practice test or use flashcards for spaced repetition review.

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Self-employment tax applies to:

✓ Correct Answer: Option B

📚 About This CPA Exam Prep Practice Question

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