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posted Jun 5, 2019 11:55:03 PM

I'm self employed filing single and I'm claimed by my parents. I have 2 1099s totaling $2,858. I made a mid year payment of $432 to the feds. Why is my refund only $28?

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2 Replies
Level 15
Jun 5, 2019 11:55:04 PM

Two things.

 If you only made one quarterly tax payment to the IRS in 2018, then you're being penalized for not making the other 3 quarterly payments. Maybe you did not start your business until after the start of the 4th quarter? If so, let me know and I"ll show you how to eliminate, or at least reduce the penalty.

In addition to the "regular" tax you pay on that self-employment income, you also pay an additional 15.3% self-employment tax on top of that. The SE tax is basically the employer side of your social security and Medicare contributions which are credited by the social security administration to your specific social security account.

So if your total income from all sources for the entire tax year was less than $12K, you will not pay any "regular" income tax on that income. However, you will pay the 15.3% SE tax on the self-employment income that exceeds $400. So 15.3% of $2,458 roughly comes out to $375 self-employment tax. So my guess is you have deductible business expenses that reduced the taxable amount of SE income. So of the $432 already paid you're getting back $28 of it. So your total tax liability for the tax year is $404 and that's all SE tax.

Level 9
Jun 5, 2019 11:55:06 PM

Just a minor correction here.  Your self employment tax is 15.3% * 92.35% of $2,858 = $404.