Federal Tax Due

[DawnMMc]

I have a couple of new (to me) tax items in my 2024 taxes. 

- I was unemployed for 6 months and collected NJ unemployment, and had federal tax withheld from my payment. 

- I did some consulting work for about 6 months - earning about $7500, and did not pay taxes yet on this income

- I took a 1-time payout from my 401K and withheld the federal tax on that (my financial advisor said that I did not owe a penalty)

- I also worked for 2 businesses and had taxes withheld from that income (recvd W2s)

Normally I receive a refund, but knew that I would owe taxes on my self-employment earnings (TTax show $1,077).  However, TTax is showing that I owe $4,457... I am trying to understand why I owe so much. I earned about the same this year as last year, with the exception of my 401k distribution, but I did pay tax on that. Any ideas why this might be happening?

[Bsch4477]

You probably didn’t account for the self employment tax on your self employment which is owed in addition to regular income tax on that income. 

[VolvoGirl]

All the income including the 401K and self employment is added together to calculate the regular income tax.  And the 401K and self employment pushed you into a higher tax bracket.  The self employment tax is in addition to the income tax on your total income.

For the 401K 

You didn’t actually pay the tax or the 10% penalty (you pay a 10% early withdrawal penalty if you are under 59 ½). You had taxes withheld like from your paycheck. You still have to enter the whole gross amount (before taxes were withheld) with your other income to figure out the total tax (and it may put you into a higher tax bracket) and then the withholding is subtracted from the total tax to figure your refund or tax due. The Gross amount shows up on 1040 line 4a or 5a and the taxable amount on 4b/5b.  You will get credit for the withholding on 1040 line 25b.

It has to break out and show the 10% penalty separately on your return (schedule 2 line 8 which goes to 1040 line 23). Then you get credit for all the withholding taken out on 1040 line 25b.

[JamesG1]

We are not able to see your tax return.

You should review your tax return to see what is reported on the tax return and see whether what is reported agrees with your understanding of what would be reported.  

In TurboTax Online, you may print or view your full tax returns prior to filing after you have paid for the software.

• View the entries down the left side of the screen at Tax Tools.
• Select Print Center.
• Select Print, save or preview this year's return.

In TurboTax Desktop, select FORMS in the upper right hand corner of the screen.

Even though I cannot see the tax return, my first suspect would be the pension distribution.  If you are not yet 59 1/2 years old, a 10% penalty for early withdrawal may be assessed on the income tax return.

Perhaps there is an exception to the penalty that simply needs to be entered in the software.  See this TurboTax Help.

My second suspect would be the self-employment taxes that the self-employment income would generate.  Self-employment taxes are reported on IRS form SE and are calculated in addition to income tax.

@DawnMMc