Most often, it’s because you entered self-employment income, either as cash or from a 1099-MISC or 1099-K form. If your self-employment income is $400 or more, after deducting expenses, you'll have to pay self-employment tax.
If you have a 1099-MISC and Box 7 is filled
This is self-employment income and you would pay taxes on it, on the conditions described above.
Not all 1099-MISC forms are from self-employment
Examples of 1099-MISC that are not from self-employment include prize money, lawsuit settlement, research study, and others. You don’t need to pay self-employment tax on these types of income. We’ll figure this for you when you enter your 1099-MISC.
If your 1099-MISC incorrectly has income in Box 7, you should contact the payer and have them issue a corrected 1099-MISC.
Other less common reasons to pay self-employment tax
- You have clergy income.
- Your income as a church employee exceeds $108.28.
- You received income from a partnership (Schedule K-1).
- The income on your 1099-MISC is incorrectly reported as self-employment income, Box 7. (Contact the payer to have them issue you a corrected 1099-MISC).
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.