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My taxable income is $4237 an my tax is $2892. How can this be?
I found a 1099 post filing and went to amend. In addition, I found that I was not claimed as a dependent on another 1040. But the resulting tax percent doesn't make sense. How is a $4,237 taxable income result in a $2,892 due? something isn't right.
Please help
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My taxable income is $4237 an my tax is $2892. How can this be?
It sounds like you may have some self-employment tax being calculated on your tax return.
Self-employment tax is 15.3% on your independent contractor, self-employment or business income. If you had significant income from 1099-MISC forms you would be taxed at 15.3% on this income after subtracting any expenses you had for that income. That's all unrelated to your taxable income.
To get to your income tax (which is a different tax than your self-employment tax), you use your taxable income. There are other deductions that are taken into account to get to your taxable income like the standard deduction ($12k for single, $24k for married filing jointly) and the qualified business income deduction which is a 20% tax break for income taxes.
So even if your taxable income and income tax is really low, you could have substantial self-employment tax due.
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