Tax Year Prior to 2020: Should a retiree with two rentals, for suplementing retirement pension, have to pay self employment taxes? Already on Medicare and SS.

[MinhT1]

You have to pay self-employment tax if you have self-employed income, whatever your age or whether you are on Medicare or SS or not.

[vazquezmag]

I have had the same retirement status for the last four years and hadn't been classified as Self-Employed in the last four filings. Why now?

[VictorW9]

If your income is above a certain limit, then you will have to pay taxes. Your social security is taxable based on your total income for the year. So, if your rental is bringing in income above a certain limit, then some or all of social security will be subject to tax.

[vazquezmag]

If Turbo Tax has not placed me as Self-employed in the last four years since I've retired, why the change of classification and the $3500+ additional tax now?

[JulieS]

TurboTax can't reclassify you as self-employed, you either are self-employed or you are not. 

If the issue is that you got a 1099-MISC for your rental income, you are supposed enter that as rental income. 

If you enter it as a 1099-MISC and answered the questions about as if it is a business, then the program will assume you are self-employed.

If this sounds like your issue, try this:

1. Click on Tax Tools toward the bottom left corner.
2. Select Tools.
3. Click on Delete a form.
4. Scroll down the list and delete Form 1099-MISC worksheet, Schedule C, Schedule C-EZ and Schedule SE.

You probably won't have all four, but search for, and delete the ones that appear on your list.
 
To delete a form, click Delete on the right and then Confirm the delete. You can only delete one form at a time. If you have a state return, you may need to delete these forms under your state as well. 
 

1. When all these forms are deleted, click Continue my return. 
2. Select Federal on the left.
3. Find Rental Properties and Royalties (Sch E) on the list.
4. If you don't see it, click on See a list of all Income in the lower left corner.
5. Click Edit/Add to the right.
6. Answer the first question Yes.
7. Enter your rental income and expenses in this section. 
8. You will be asked for the 1099-MISC information a few screens in. 

[vazquezmag]

Thank you. A million times, thank you. After spending two awful, worrisome days of trying to get the Turbo Tax promise of help . . . they charged me over $200 for 2018!!

One final question. Sch SE, p1-T and Schedule SE adjustment worksheet also appear on forms. SHOULD I ALSO DELETE THESE? There are also there Qualified Business Income component west and Deduction Summary. Delete also?

Maggie

[JamesG1]

Schedule SE forms are generated if you reported Schedule C income and will repopulate if you delete the forms and you have reported Schedule C income.

If the Qualified business income forms are deleted, they may come back depending upon how you have answered questions in the software.

In Home & Business the question can be found under the screen titled Is this Qualified Business Income.  Click the link on the screen More info about what's considered a qualified business.

Residential rental income can be considered a qualified business and qualify for a qualified business income deduction if you have net income on the activity.