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pabloUH
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Taxes calculations

I am having the following scenario: I am filing taxes jointly with my wife. For 2022, my primary income is based on W2 and then I have some additional self employed income, and my wife has mostly from her self employed (LLC) and some from a W2 as she switched jobs. When doing my taxes, if I start with the W2, seems that because we were not retained enough, it says we owe X. If I start with the self employed one, it will say we owe Y dollars.

But when clubbed all together, instead of owing X + Y, it is telling I am owing way more than that. Can someone explain this? It is confusing for me and not sure how to proceed. I am using TurboTac Home & Bizz edition, the dowloaded version for Windows. Thanks!

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2 Replies

Taxes calculations

You refund or tax due is not "per W-2" or per spouse.  It is based on ALL of the income you enter and all of your combined tax liability.   That "refund monitor" does not mean anything until you have entered everything completely.   It is normal to see it change as you continue to add income to the software.  It does not matter what source of income you "start" with---it will all be reconciled when you have everything entered.

**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**

Taxes calculations

You owe a higher tax on ALL your income combined, both the W2 and self employment.  Because we have a progressive tax system. The more total income you make you pay a higher percent for tax.  You are taxed on your total income. The more total income you make you pay a higher percent for tax.

 

Plus you owe separate Self Employment tax if you have a Net Profit.    You pay 15.3% SE tax on 92.35% of your Net Profit (If it is greater than $400). The 15.3% self employed SE Tax is to pay both the employer part and employee part of Social Security and Medicare (FICA). So you get social security credit for it when you retire.


The SE tax is already included in your tax due or reduced your refund. It is on the 1040 Schedule 2 line 4 which goes to 1040 line 23. The SE tax is in addition to your regular income tax on the net profit.

 

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