My consulting business income is $3,500. I should be able to contribute $3,500 to Roth IRA. But Turbo Tax online insists I can only contribute $3,253; why?

You have to subtract out the deductible half of the self employment tax from the net profit on Schedule C.  It’s the amount on 1040 line 27.

Found my longer answer.  For an IRA contribution.  If you only have self-employment income you can only contribute up to your net profit reduced by the deduction allowed for one-half of your self-employment taxes.  See IRS publication 590 <a rel="nofollow" target="_blank" href="http://www.irs.gov/pub/irs-pdf/p590a.pdf">http://www.irs.gov/pub/irs-pdf/p590a.pdf</a>

So check 1040 line 27.  You have to deduct that amount from your Schedule C Net Profit.  That will give you the allowed contribution for the 1099Misc income.