My granddaughter earned $1679 working for her dad and received a 1099 misc. turbotax shows her net taxable income as zero but shows $237 due to the irs

[jerry2000 · Accepted solution]

That is because she has to pay self-employment tax even if she owes no ordinary income tax. The self-employment tax is 15.3% of 92.35% of her self-employment income.

[Patrice]

This is because she is subject to self-employment taxes.  Self-employment tax is a tax consisting of Social Security and Medicare taxes primarily for individuals who work for themselves or that receive at 1099-MISC. It is similar to the Social Security and Medicare taxes withheld from the pay of most wage earners and this is why although the net taxable income is zero she is still responsible to pay self employment taxes.

When you're an employee, you share that cost with your employer, with each of you paying a share of the FICA tax. When you're self-employed, though, you're stuck with the full amount yourself.  

Self-employment taxes consist of 

• 12.4% for Social Security. For 2016, this part of the tax applies to the first $118,500 of earnings. If you earn more than that (from self-employment or, if you also have a job, from the combination of your job and your business), then the 12.4 percent part of the tax that pays for Social Security stops for the year.
• 2.9% for Medicare. The Medicare portion of the self-employment tax doesn’t stop. No matter how much you earn, you'll pay the 2.9 percent Medicare tax.