If you have 1099-MISC income in Box 7,over $400, you will owe Self-employment tax on that amount. SE tax is social security and medicare. That tax cannot be reduced by itemized deductions. In addition, your medical bills are a part of your itemized deductions. Only the amount of medical expenses over 7.5% of your Adjusted Gross Income is deductible, and only then if your total itemized deductions exceed the new, higher standard deduction.
If you have 1099-MISC income in Box 7,over $400, you will owe Self-employment tax on that amount. SE tax is social security and medicare. That tax cannot be reduced by itemized deductions. In addition, your medical bills are a part of your itemized deductions. Only the amount of medical expenses over 7.5% of your Adjusted Gross Income is deductible, and only then if your total itemized deductions exceed the new, higher standard deduction.
Can this self-employment tax also not be reduced by business expenses?
This is a tax that is calculated on your net profit on a Schedule C business, so the higher your expenses, the lower the profit, and the lower the tax.
Yes the self employment tax is only on the Net Profit on Schedule C which is income - expenses. Have you entered any expenses yet?
Not yet. I am debating if I should based on the fact that it wasn't large amount of taxes to begin with. Thanks for the tip!
Well to enter self employment expenses you have to use the highest version, the Self Employed version. You can enter income into Deluxe and Premier, but not the Free Edition. It shows you are in the Free Edition. Or are you using the Free File website? That can do the full schedule C with expenses for free.
I am not using the Free File website. How do I get to that website?
Do you qualify for it? There is also The Turbo Tax Free File program which is free for federal and state. And has more forms than the Federal Free Edition, like Schedules A, B, C , D, E, F, EIC, H, K-1, SE, etc.
To qualify for the Tax Freedom website you just need to meet one of these 3 things
AGI $34,000 or less
Active duty military with AGI of $66,000 or less
OR qualify for EIC (earned income credit.)
In order to use the Free File program, you have to start it at a special website. Click on the bottom Orange button I Qualify Start Now and set up a NEW account
<a rel="nofollow" target="_blank" href="http://turbotax.intuit.com/taxfreedom/">http://turbotax.intuit.com/taxfreedom/</a>
You may want to try this edition of TurboTaax. If you qualify, it's free and you could enter your expenses