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posted Jun 4, 2019 5:00:31 PM

How does a 1099-misc for 7200 reduce my retrun from receiving $2300 to Owing $320?

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1 Best answer
Level 15
Jun 4, 2019 5:00:33 PM

If the 1099-MISC is for self-employment income you have to pay both income tax and self-employment tax on the income. If you are in the 25% tax bracket, the net self-employment tax is about 12.36%.

  • Income tax = 25% of $7,200 = $1,800
  • Self-employment tax = 12.36% of $7,200 = $890
  • Total tax = $1,800 + $890 = $2,690
  • $2,300 refund minus $2,690 additional tax = $390 owed

Either the figures you posted are not exact, or some side effect of the added income reduced the amount you owe to $320.

1 Replies
Level 15
Jun 4, 2019 5:00:33 PM

If the 1099-MISC is for self-employment income you have to pay both income tax and self-employment tax on the income. If you are in the 25% tax bracket, the net self-employment tax is about 12.36%.

  • Income tax = 25% of $7,200 = $1,800
  • Self-employment tax = 12.36% of $7,200 = $890
  • Total tax = $1,800 + $890 = $2,690
  • $2,300 refund minus $2,690 additional tax = $390 owed

Either the figures you posted are not exact, or some side effect of the added income reduced the amount you owe to $320.