How can the Tax Due amount be higher than the Income After Deductions

[yves_lafrance]

The difference between my Total Income and Federal deductions and exemptions is $3300 but my Federal Tax Due amount is $3500. Should I not be paying taxes on the $3300? Otherwise that's above 100% taxation!

[DoninGA]

You need to look at your actual Form 1040 to see where the problem is located.  Click on My Account at the top of the online program screen.  Click on Tools.  Click on View Tax Summary.  Click on 'Preview my 1040' at the top of the screen.  Scroll down through the Form 1040 and reply back on where you see the problem on the form.  Look specifically at the lines for Adjusted Gross Income, Standard/Itemized Deductions, Taxable Income, Tax, Total Credits, Total Tax and Total Payments.

[yves_lafrance]

Tentative tax is at $0 but Other Taxes is at $3462 plus a $37 Estimated tax penalty

[DoninGA]

What line number of the Form 1040 is showing the $3,462?  Do not look at the the summary screen or use the number shown on the Wages and Income screen for taxes owed.  Look at your actual tax return.  The 'Amount You Owe' will be shown on Form 1040 Line 78 or Form 1040A Line 50.

[VolvoGirl]

Do you have any self employment income?  You can look at the actual 1040 here.  Check lines 57-62 to see where the extra tax is coming from.

To preview your Online return, go to My Account at the top.  Then Tools, then View Tax summary.  Then you can click on Preview My 1040 at the top.  AGI is on line 37 at bottom of first page.

OR click Review near the top of your screen, and then click Summary right below it.
Then Near the bottom of the We Guarantee Your Maximum Refund screen, click the Preview Return link.

[yves_lafrance]

You're right, I was looking at the summary. Sorry. $3462 is on line 57
Self-employment tax. It's my first time w/o a W-2. Is there something to offset this tax?

[VolvoGirl · Accepted solution]

Yes.  Have a lot of business expenses.

Self Employment tax (Scheduled SE) is generated if a person has $400 or more of net profit from self-employment on Schedule C.  You pay 15.3% SE tax on 92.35% of your Net Profit greater than $400.  The 15.3% self employed SE Tax is to pay both the employer part and employee part of Social Security and Medicare.  So you get social security credit for it when you retire.  You do get to take off the 50% ER portion of the SE tax as an adjustment on line 27 of the 1040.  The SE tax is already included in your tax due or reduced your refund.  It is on the 1040 line 57.  The SE tax is in addition to your regular income tax on the net profit.

You will still owe the SE tax even if your taxable income is reduced to zero (by exemptions and deductions) and you don't owe any regular income tax on it.

See IRS…. http://www.irs.gov/taxtopics/tc554.html

[VolvoGirl]

If you have a SE tax of 3462 then you must have $24,502 on 1040 line 12?  24,502 would be the Net Profit on Schedule C (or C-EZ).  I guess you got a 1099Misc for something?  Usually you have to use the Home & Business version to fill out schedule C.  But Deluxe or Premier will work if you have less than $100 of expenses.

Will you have self employment in the future?  You probably need some general info on it.

If you have Self Employment income you have to file a schedule C in your personal 1040 return. You may get a 1099Misc for some of your income but you need  report all your income.  So you need to keep your own good records. Here is some reading material……

IRS information on Self Employment….
<a rel="nofollow" target="_blank" href="http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Self-Employed-Individuals-Tax-Center"...>

Pulication 334, Tax Guide for Small Business
<a rel="nofollow" target="_blank" href="http://www.irs.gov/pub/irs-pdf/p334.pdf">http://www.irs.gov/pub/irs-pdf/p334.pdf</a>

Publication 535 Business Expenses
<a rel="nofollow" target="_blank" href="http://www.irs.gov/pub/irs-pdf/p535.pdf">http://www.irs.gov/pub/irs-pdf/p535.pdf</a>

There is also QuickBooks Self Employment bundle you can check out which includes one Turbo Tax Home & Business return....
<a rel="nofollow" target="_blank" href="http://quickbooks.intuit.com/self-employed">http://quickbooks.intuit.com/self-employed</a>