TurboTax tells me "After applying your deductions, your taxable income is $0. Based on this amount, your total tax before any credits is [equivalent to ~27% of my total income]. This includes self-employment tax of [equivalent to ~27% of my total income]."
This text makes it sound like I shouldn't have any amount viable to be taxed via income tax, so I should have the 15% self-employment tax on my income only, not 27%. Am I reading this correctly?
No, TurboTax is talking about two different taxes. It means you do not have any taxable income, so your income tax is 0. But self-employment tax does not depend on your taxable income. Instead it is applied to your net business income/profit. Why am I paying self-employment tax?
If your total net business income is 10K (after business expenses) - you would not have a tax liability since your standard deduction would reduce your income to zero. But you would still owe the self-employment tax on the 10K. Self-employment tax and income tax are two separate taxes. You can owe self-employment tax even if you don't need to pay income tax.
The self-employment tax (officially known as the SECA tax for Self-Employment Contributions Act tax) is the self-employed person's version of the FICA (Federal Insurance Contributions Act) tax paid by employers and employees for Social Security and Medicare, and it's due on 92.35% of your net earnings from self-employment.