topic 1099-MISC Calculation in Get your taxes done using TurboTax

1099-MISC Calculation

ashley-gotz — Sat, 15 Feb 2020 12:55:20 GMT

Before I entered my 1099-MISC, I was receiving a refund of $944 Federal based on my W2. After entering my 1099-MISC totaling $3,625, I now OWE $316 in Federal.

If self-employment tax is 15.3% and only applies to 92.35% above $400, shouldn’t it only be taking around $512 in federal leaving me with a refund of $432?

3625x 92.35% = $3,348

$3,348 x 15.3% = $512.24

I’m not understanding why it’s taking my whole refund plus $316 ($1,260 total). It did not push me into a different bracket.

Am I missing something? Any help would be appreciated!

Re: 1099-MISC Calculation

AnnetteB6 — Sat, 15 Feb 2020 13:26:08 GMT

I agree that it does seem like a large swing between a refund and balance due, but in order to understand exactly what happened, you need to look at the overall tax return and not just the 1099-MISC income.

When you entered your Form 1099-MISC income, there were more changes than just addiing the self-employment tax. You increased your taxable income, took a deduction for 1/2 of the self-employment tax, and added the self-employment tax. This also changed your Adjusted Gross Income (AGI), which may affect certain credits that could be on your return. Increasing your income could reduce any Earned Income Tax Credit (EITC) that may have been included. Bottom line, the effect on your overall return is more complicated than just the increase due to the self-employment tax.

If you really want to understand what happened, you should compare your Form 1040 before and after the change of adding the Form 1099-MISC. You can still do this without deleting the work you did to add the Form 1099-MISC, just change the amount of income shown to $1 instead of $3625.

Then, use the steps in the following TurboTax article for how to preview your Form 1040 using TurboTax Online:

How do I preview my TurboTax Online return?

Re: 1099-MISC Calculation

ashley-gotz — Sat, 15 Feb 2020 13:35:11 GMT

Thank you, Annette! I’m going to look at the forms to have a clear understanding. In my initial calculation, I also did not take into consideration FIT in that amount, only SE tax. Figuring in FIT at 22% gets me around that $1,260 mark.