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Level 2

Solved

1099-NEC Refund hit

2 replies
34 views

I have a 1099-NEC with Nonemployee compensation of $2,790. Before entering the 1099-NEC information, my Federal tax refund in TurboTax was showing as $5,916. After entering the 1099-NEC amount, and not claiming QBI, the refund dropped to $4,861, a reduction of $1,055 on my return. I'm in the 24% tax bracket, so why is this coming out to be a 38% hit?

Not A Product Question

DawnCAnswer

Employee Tax Expert

The income is considered self-employment income. You owe regular income tax (24%) on those earnings plus Self-Employment Tax (15.3%). As a self-employed taxpayer, you pay both the employee and employer portions of social security and medicare tax on that income.

If you have any expenses related to that income, you can enter those which will reduce your net profit and SE tax.

Where do I enter SE expenses?

**Say "Thanks" by clicking the thumb icon in a post. **Mark the post that answers your question by clicking on "Mark as Best Answer"

Employee Tax Expert

Answer

Employee Tax Expert

The income is considered self-employment income. You owe regular income tax (24%) on those earnings plus Self-Employment Tax (15.3%). As a self-employed taxpayer, you pay both the employee and employer portions of social security and medicare tax on that income.

If you have any expenses related to that income, you can enter those which will reduce your net profit and SE tax.

Where do I enter SE expenses?

**Say "Thanks" by clicking the thumb icon in a post. **Mark the post that answers your question by clicking on "Mark as Best Answer"

rkb3Author

Level 2

Thank you Dawn. I had not realized Self Employment tax and regular income tax are additive.