social security tax on 1099-NEC income

[tgad1000]

I have entered my 1099-NEC income in Turbo Tax. What is making me not comfortable is that there was a refund. I don't understand. My gross income is $7500, and turbo tax calculated a $1239 refund. It is making me feel that I made a mistake.

In addition, I want to know how do I pay social security tax on this income? please explain.

Best...

Tarek

[VolvoGirl]

Did you fill out Schedule C for the 1099NEC income?  The Social Security tax is automatically figured on the net profit on Schedule C 

You pay Self Employment tax (Scheduled SE) on a Net Profit of $400 or more on Schedule C in addition to regular income tax on it.   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.  So you get social security credit for it when you retire.  

The SE tax will be included in your tax due or reduce your refund.  It is on the 1040 Schedule 2 line 4 which goes to 1040 line 23.

[tgad1000]

so why when I entered the amount of $7500, it has given me a refund of $1237.

another question,

I found on schedule C the following:

Self employment deduction to this business:

Total deduction to 1/2 self employment tax is $454

deduction for 1/2 SE tax connected to this business is $454.

does that means I am paying the social security tax? What is 1/2. I want to get the full credit of the year which is 4 credit.

please explain.

Best...

Tarek

[VolvoGirl]

Don't know why you have a refund.  Do you have other income like a W2 with tax withholding?  Yes you do get to take off the 50% ER portion of the SE tax as an adjustment on 1040 Schedule 1 line 15 which flows to 1040 line 10.  It won't affect your SS credit.  

On your Schedule C profit you are paying both parts (the employer and employee) of the self employment tax.  

The self employment tax is 15.3% for……

SS for employer 6.2% (up to 160,200 wages & profit)

SS for employee 6.2% (up to 160,200 wages & profit)

Medicare for employer 1.45% (on all wages & profit, no max)

Medicare for employee 1.45% (on all wages & profit, no max)

[tgad1000]

Thank you so much for your time!

My main concern is to pay my social security tax so I can get the credit.

Best...

Tarek