It is asking you to revisit the section regarding deferring a portion of the self-employment tax. If you were in this section before a refund was calculated, you were eligible. However, with a refund, you are no longer eligible.
Go back to the interview section to correct these entries and un-trigger any deferral that you can no longer take and probably later declined. You will need to initially accept it before declining.
To do this in TurboTax, follow these steps:
Enter a temporary amount as income in the self-employment section that will result in you not having a refund.
- From the left menu, select Federal.
- From the Income & Expenses, scroll to Self-employment income & expenses and Edit/Add.
- At Your 2020 work summary, select Edit.
- Under INCOME, select Add income for this work.
- Add Other self-employed income, includes 1099-K, cash, and checks and Continue.
- At Type of income, enter Temp income to remove deferral and enter a large amount, such as $100,000 and Continue.
Decline to defer any self-employment tax.
- From the left menu, click on Federal.
- Click the second tab from the left, Deductions & Credits.
- Scroll down to Tax Relief related to Covid-19 and Revisit.
- Select Self-employment tax deferral and select Revisit.
- Answer Yes at the next screen to get back to Let's start by getting your eligible income.
- Enter 280/366ths of your income to reflect the income from March 27-December 31, 2021.
- This amount should be the same as the correct amount on Line 18 of Sch SE.
- Select Continue.
- At Tell us how much you'd like to defer,
- Enter 0.
Remove the temporary income.
- From the left menu, select Federal.
- From the Income & Expenses, scroll to Self-employment income & expenses and Edit/Add.
- At Your 2020 work summary, select Edit.
- Under INCOME, select the Trash can icon next to Temp income to remove deferral and Continue.
For more details, see TurboTax Expert @DawnC's answer here, about 2/3 down the page: Resolve Sch SE-T Max Deferral Line 18 must be entered.
