I received a 1099-MISC for a side job that I did (not related to my main job). Is it normal that $5,000 worth of income lower my tax refund by $2,600? This is a 52% tax!

RAMSES_LL · ‎June 4, 2019

MinhT · ‎June 4, 2019

Income received on form 1099-MISC is self-employment income. On the amount earned, you have to pay self-employment tax and income.

Self-employment tax is calculated at 15.3% on 92.35% of your income. On $5,000, you pay $706 of self-employment tax.

Income tax on the additional $5,000 may have pushed you into the next higher tax bracket.

Also, the extra income may have lowered your Earned Income credit. Earned income credit follows a bell-shaped curve. It gradually increases up to a point when it starts to decrease as your income rises.

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View solution in original post

MinhT · ‎June 4, 2019

Income received on form 1099-MISC is self-employment income. On the amount earned, you have to pay self-employment tax and income.

Self-employment tax is calculated at 15.3% on 92.35% of your income. On $5,000, you pay $706 of self-employment tax.

Income tax on the additional $5,000 may have pushed you into the next higher tax bracket.

Also, the extra income may have lowered your Earned Income credit. Earned income credit follows a bell-shaped curve. It gradually increases up to a point when it starts to decrease as your income rises.

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

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I received a 1099-MISC for a side job that I did (not related to my main job). Is it normal that $5,000 worth of income lower my tax refund by $2,600? This is a 52% tax!