Yes, the added business expenses created the problem. When you prepared your original tax return, TurboTax asked you how much of your self-employment income you earned from March 27, 2020 through December 31, 2020. The amount you entered is on Schedule SE line 18. But the added expenses reduced your total net profit for the year (line 3) to less than you said you earned from March 27 on. Obviously that can't be.
TurboTax cannot fix it on its own because it's not an amount that TurboTax calculates. It's an amount that you enter. TurboTax has no way of knowing how much of your self-employment income you earned from March 27 to the end of the year, except to ask you. To correct the error you have to go through the self-employment tax deferral section of the interview again and enter the revised amount.
Here's how to do it in TurboTax Home & Business for 2020.
- Click the Personal tab.
- Click Deductions & Credits.
- Click "I'll choose what I work on."
- On the screen "Your 2020 Deductions & Credits," scroll down to the section "Tax relief related to COVID-19."
- Click the Update button for "Self-employment tax deferral."
- The first screen asks "Do you want more time to pay your self-employment tax?" Click Yes.
- On the next screen, enter the amount of your revised self-employment income that you earned from March 27 to December 31.
- On the next screen, check the reduced amount that can now be deferred.
