Filing taxes

[Rockinrunner]

Hi, I work freelance for a company based in Canada, I get paid by Paypal and have no taxes deducted, I entered my income on Business income (sched C) I made approx 24000 last year and after deductions my taxable income is 5200, it says I owe 3400 in federal taxes, that does not make sense, am I doing something wrong?

[VolvoGirl]

How much is the Net Profit on Schedule C for the business?  You owe self employment tax in addition to the regular income tax on it.

Self Employment tax (Scheduled SE) is automatically generated if a person has $400 or more of net profit from self-employment. 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.

[flredsox]

Did you get a 1099 from Paypal stating what you were paid in total?  $3200 seems high for making $24000 dollars.  I do my daughters taxes and she is makes about the same amount and only $800 is withheld.  On the schedule C you can take a lot of deductions to reduce the taxable income.  Which it sounds like you did, getting the taxable income to $5400.  From the Tables or websites on Tax brackets it looks like your tax rate is 12% , which is 53400 x 12--> $648.  

[Rockinrunner]

I did not get a 1099 or any other forms

[CatinaT1]

Besides your Schedule C income, do you have any other income? Did you have a 1095-A for marketplace insurance?

[Rockinrunner]

No other income

[Vanessa A]

Where do you see your taxable income amount?  If you are looking on line 15 of your 1040, then your tax would consist of the 10% tax rate on the $5,200 and then 15.3% on that $5,200 PLUS your standard or itemized deduction.  So if you are single, then you would add back $12,950 to your income for a total of $18,150 and have an additional $2,776.95 plus the $520 for your ordinary tax rate for a total of about $3,300.

You will find the self-employment tax amount on Schedule 2 line 4.