1099-NEC Causing Massive Deduction in Refund

Forum|Forum|4 years ago
April 9, 2022
2 replies
35 views

Hi all,

I'm in a strange situation and I'm not sure what I'm doing wrong. I completed my Turbotax and chose the file-by-mail option, but then found that I had a pending 1099-NEC. This amount was about $10k and I received it as a part of a compensation for work that I did two years ago.

My original return showed a federal refund but when I amend my return and add the 1099-NEC, my refund vanishes and turbotax shows need to pay ~$2k. I used the Turbotax estimator for calculating my tax and it showed that my refund went less by $1k. I am not sure how to go about amending this and what I'm doing wrong. I'm a very underfunded graduate student and cannot afford to pay such a high tax!

Any pointers will be appreciated.

Thanks,

TurboTax Free Edition Online

VolvoGirl

Level 15

If it ended up on Schedule C for self employment you pay SE tax on it in addition to any regular income tax.

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. So you get social security credit for it when you retire.

When you enter one taxable transaction, you can't just watch the monitor. You increased your overall adjusted gross income and with that come many other changes in your return, not just the incremental tax on the one transaction.

Like for example it increased your AGI and that would decrease some deductions if you itemized on Schedule A. And by increasing your AGI it might reduce some credits you were getting like EIC. And can make more of any Social Security taxable.

akulshAuthor

Level 2

@VolvoGirl thanks, how do I start this return over? I think some mistake was made and since this is before deadline I should be able to start over with all proper forms right?

VolvoGirl

Level 15

Wait a minute. So did you mail the original return? If you haven't filed yet you do not Amend. If you did file you need to wait to amend until you get the first refund. That sounds right on an amended return. You still get the first refund then the amended return is only the difference you owe back.

If you clicked on the amend button to fix it you might need to undo that first. How to delete an Amended return in the Online version

https://ttlc.intuit.com/community/amending/help/how-do-i-cancel-or-undo-an-amended-return-in-turbotax-online/00/26315

Then to change a return If you haven't mailed or efiled yet, see

https://ttlc.intuit.com/community/tax-topics/help/i-want-to-change-a-return-i-ve-printed-but-haven-t-mailed/00/27616

akulshAuthor

Level 2

@VolvoGirl no I haven't mailed the return yet. I filed my return without the 1099-NEC form and got a refund estimate.

If I understand you right, if I amend my return, the estimate that Turbotax is the difference that I would need to pay back (e.g. if I had about $4k in refund earlier and after amending it, Turbotax showed me a payment of $2k, then this $2k is from that $4k original refund)?

VolvoGirl

Level 15

Yes that is pretty much right. But, what return haven't you mailed yet? The Original return or the Amended return?

If you didn't mail the first original return, DO NOT AMEND! You have not filed at all yet. There is nothing to amend. Just add it to your original return. Like I said above, you need to delete the amended return. Then it should show the right refund.