Why is my 1099-NEC not included in my dependent stan. deduction calculation, just my W-2 (def: earned Income plus $350 while under the SD of $12,400?, in 2020 amendment)

[justinsmiley52]

It does not appear that the calculation is including anything more than the W-2 for my earned income and i have not hit the 12400 threshold so its taxing my 1099-NEC income.

[SweetieJean]

You still owe self-employment taxes on the 1099-NEC, which are the employer and employee's shares of Social Security and Medicare payroll taxes.

Self-Employment Tax: How to Calculate It in 2021 - NerdWallet

[VolvoGirl]

2 different things going on.   Regular Income Tax and Self Employment Tax.

The 1099NEC is for self employment income.  You fill out schedule C for it.  Then the Net Profit or Loss goes to the 1040 Line 8 as Other Income.  The income is being included with your W2s. The Profit on Schedule C is counted as Earned Income for the Dependent Standard Deduction.  The amount that counts towards Earned Income is the Net Profit (minus 1/2 the SE tax)

Then the Standard Deduction is subtracted from ALL  your income.   If your Taxable Income is 0 there is no REGULAR Income Tax on your total income.  

But you will still owe the Self Employment Tax on it.  Self Employment tax (Scheduled SE) is automatically generated if a person has $400 or more of net profit from self-employment. 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. 

[justinsmiley52]

It appears that TurboTax put my 1099-NEC into a schedule 1 instead of a schedule C so that is likely why i am not get computed self-employment tax and the standard deduction for a dependent is not including the earned income from the 1099.  How do determine how to fix this inside TurboTax?

[justinsmiley52]

Running through the 1099-NEC again cleared out the tax so i assume it increased the standard deduction but it still is not triggering a schedule C unless i have other expenses to deduct..i will keep looking.  But the first issue of standard deduction for a dependent has cleared.

[DawnC · Accepted solution]

Your 1099-NEC income will show up on both Schedule 1 and Schedule C.   Your net income from Schedule C is what shows up on Line 3 of Schedule 1.   

Look at your Form 1040 - your standard deduction is on Line 12.   The standard deduction will offset regular income tax for your W-2 wages and your Schedule C income.   However, your Schedule C income will also generate the Self-employment Tax which does not get reduced by your standard deduction.  The tax is an additional tax that cannot be offset by your standard deduction.    

To go straight to your Schedule C when working on your return, 

• Open or continue your return.
• Search for schedule c and click the Jump to schedule c link in the search results.