cancel
Showing results for 
Search instead for 
Did you mean: 
Highlighted
Level 1

Entering 1099, we added a 1099. the effective tax rate based Ion this input was 45%. It should have been 33 %. How do in investigate?

 
1 Best answer

Accepted Solutions
Level 12

Entering 1099, we added a 1099. the effective tax rate based Ion this input was 45%. It should have been 33 %. How do in investigate?

What type of 1099 was this - if this was a Form 1099-MISC for independent contractor work, then you would also be subject to self-employment taxes of roughly ~15% of the net amount in addition to your regular income tax rate.  This would likely explain the unexpected result.

Also, you can't really view your taxes based off one input.  While your marginal rate may be 33%, adding additional income can affect your eligibility for other tax deductions and credits.  So, in addition to the taxes you are paying on the new income, you might be losing other tax benefits, which causes your total tax liability to go up more than your marginal rate.  For example, the Child Tax Credit phaseout begins at $110,000 for married filing jointly ($75,000 if single).  So, if you added income that took you over this threshold, not only would you be paying the tax, you would also be losing the benefit of the tax credit, which causes higher tax liability.  

If you want to trace the changes, then you could compare you Form 1040 with the 1099 and without.  Use the steps below to preview your Form 1040 in the program (or you can use the print center to print out a copy) before you enter your 1099 and then after and note any changes. 

You can Preview your Form 1040 in TurboTax by using the following steps -

  • Log into your account and click Take Me to My Return
  • On the left-hand side of your screen, you should see an option for Tax Tools and a drop-down menu 
  • Select Tools
  • Click View Tax Summary
  • Now, you will see a tax summary on your main active window.  But, to the left-hand side of the screen, you should now also see an option to Preview my 1040 next to where the Tax Tools button was before.
  • Click on Preview my 1040 and you can view your main tax form.
1 Reply
Level 12

Entering 1099, we added a 1099. the effective tax rate based Ion this input was 45%. It should have been 33 %. How do in investigate?

What type of 1099 was this - if this was a Form 1099-MISC for independent contractor work, then you would also be subject to self-employment taxes of roughly ~15% of the net amount in addition to your regular income tax rate.  This would likely explain the unexpected result.

Also, you can't really view your taxes based off one input.  While your marginal rate may be 33%, adding additional income can affect your eligibility for other tax deductions and credits.  So, in addition to the taxes you are paying on the new income, you might be losing other tax benefits, which causes your total tax liability to go up more than your marginal rate.  For example, the Child Tax Credit phaseout begins at $110,000 for married filing jointly ($75,000 if single).  So, if you added income that took you over this threshold, not only would you be paying the tax, you would also be losing the benefit of the tax credit, which causes higher tax liability.  

If you want to trace the changes, then you could compare you Form 1040 with the 1099 and without.  Use the steps below to preview your Form 1040 in the program (or you can use the print center to print out a copy) before you enter your 1099 and then after and note any changes. 

You can Preview your Form 1040 in TurboTax by using the following steps -

  • Log into your account and click Take Me to My Return
  • On the left-hand side of your screen, you should see an option for Tax Tools and a drop-down menu 
  • Select Tools
  • Click View Tax Summary
  • Now, you will see a tax summary on your main active window.  But, to the left-hand side of the screen, you should now also see an option to Preview my 1040 next to where the Tax Tools button was before.
  • Click on Preview my 1040 and you can view your main tax form.