KathrynG3
Expert Alumni

Get your taxes done using TurboTax

The SE Tax deferral is optional and the workaround listed below has been reported to correct the issue. Yes, you are correct, deleting Sch SE is one solution. 

The Workaround to decline deferring any portion of the self-employment tax: temporarily trigger a balance due by adding income long enough to decline the SE tax deferral option, then remove the extra income.

 

1. Enter a temporary amount as income in the self-employment section that will result in you not having a refund.

  1. From the left menu, select Federal.
  2. From the Income & Expenses, scroll to Self-employment income & expenses and Edit/Add.
  3. At Your 2020 work summary, select Edit.
  4. Under INCOME, select Add income for this work.
  5. Add Other self-employed income, includes 1099-K, cash, and checks and Continue.
  6. At Type of income, enter Temp income to remove deferral and enter a large amount, such as $100,000 and Continue.

2. Decline to defer any self-employment tax.

  1. From the left menu, click on Federal.
  2. Click the second tab from the left, Deductions & Credits.
  3. Scroll down to Tax Relief related to Covid-19 and Revisit.
  4. Select Self-employment tax deferral and select Revisit.
  5. Answer Yes at the next screen to get back to Let's start by getting your eligible income.
    1. Enter 280/366ths of your income to reflect the income from March 27-December 31, 2021. 
      • This amount should be calculated and entered without the false added income, and will post to Line 18 of Sch SE
    1. Select Continue.
    1. At Tell us how much you'd like to defer, 
      • Enter 0.

3. Remove the temporary income.

  1. From the left menu, select Federal.
  2. From the Income & Expenses, scroll to Self-employment income & expenses and Edit/Add.
  3. At Your 2020 work summary, select Edit.
  4. Under INCOME, select the Trash can icon next to Temp income to remove deferral and Continue.

4. Run the review again.

 

The error may have initially happened from the following scenario:

  • While the return was in a balance due, the tax return was eligible for the Cares Act self-employment tax deferral option. This section was completed.
  • However, as more details were entered and the results changed to a refund, the SE tax deferral option was no longer available.  

For more details, see: IRS: Deferral of employment tax deposits and payments through December 31, 2020.

 

@lizcoley