If 1099 NEC amount is less than Standard Deduction and have zero taxable income, why do I owe tax still?

[VolvoGirl]

You don't owe any income tax on it but you owe self employment tax.

You pay Self Employment tax (Scheduled SE) on a Net Profit of $400 or more on Schedule C in addition to regular income tax on it.   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 automatically 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.

You are paying 15.3% for……

SS for employer 6.2% (up to 160,200 wages & profit)

SS for employee 6.2% (up to 160,200 wages & profit)

Medicare for employer 1.45% (on all wages & profit, no max)

Medicare for employee 1.45% (on all wages & profit, no max)

[DawnC]

Because 1099-NEC income is self-employment income, and you have to pay self-employment tax on that income.   It is separate from your ordinary income tax, which in your case is zero.   The standard deduction cannot lower your self-employment tax.    If you have business expenses, those will reduce your net income and reduce your SE tax.   You need to make estimated payments to avoid penalties if you are self-employed.    

How does self-employment affect my taxes?