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mmrkelly46
New Member

I am 74 on social security and received $3000 for consulting (1099) in 2020. Why would I owe $424 Federal Income tax on this small amount?

I thought the income amount to start being taxed was like $25,000.
2 Replies
xmasbaby0
Level 15

I am 74 on social security and received $3000 for consulting (1099) in 2020. Why would I owe $424 Federal Income tax on this small amount?

Because you have to pay self-employment tax for the consulting work.    You pay SE tax for even as little as $400 of self-employment work.

 

https://ttlc.intuit.com/community/self-employed/help/what-is-the-self-employment-tax/00/25922

 

https://ttlc.intuit.com/questions/2902389-why-am-i-paying-self-employment-tax

 

 

**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**
VolvoGirl
Level 15

I am 74 on social security and received $3000 for consulting (1099) in 2020. Why would I owe $424 Federal Income tax on this small amount?

You probably don't owe any regular income tax on your income but you owe self employment tax on it.

 

Self Employment tax (Scheduled SE) is automatically generated if a person has $400 or more of net profit from self-employment.  You pay 15.3% SE tax on 92.35% of your Net Profit (If it is greater than $400).  The 15.3% self employed SE Tax is to pay both the employer part and employee part of Social Security and Medicare. 

 

SE tax is on the 1040 Schedule 2 line 4 which goes to 1040 line 23.

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