Blended tax rate

Forum|Forum|3 years ago
April 14, 2023
8 replies
48 views

My blended tax rate is almost at 50% this year, and last year it was at 10%. Must be a mistake, and how do i fix it?

TurboTax PLUS Online

DianeW777

Alumni - Intuit

It depends. There are many factors that determine your tax rate. We would need you to clarify additional details on your return to provide insight or solutions.

Example: Self employment net profit creates a 15.3% tax for social security and medicare tax (self employment taxes); personal income tax is determined based upon your total taxable income (Line 15, Form 1040), which includes the same net profit from business income.

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

MAR96Author

Level 2

Hello, ive looked more into it, and its that high because of a self employment tax, but i dont know where that tax of about 2000 came from. Its listed under "other taxes" but all my employer pay and independent contractor work is under "taxable income" so i have no clue where this amount is coming from

VolvoGirl

Level 15

You pay Self Employment tax (Scheduled SE) on a Net Profit of $400 or more on Schedule C. 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.

The SE tax will be included in your tax due or reduce 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. You do get to take off the 50% ER portion of the SE tax as an adjustment on 1040 Schedule 1 line 15 which flows to 1040 line 10.