Self Employment Tax?

[t-tomley]

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?

[DawnC]

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.