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My wife made $2,094.16 from non employee compensation on a 1099, with no federal income tax withheld. When I add her 1099, it taxes for 23% of that income. Why so much?
We lose $491 of her $2094 earned. That seems high and I don't understand why it is so much.
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My wife made $2,094.16 from non employee compensation on a 1099, with no federal income tax withheld. When I add her 1099, it taxes for 23% of that income. Why so much?
If the income was reported in Box 3 of the 1099-MISC, then it is classified as other income. It is added to your other income and taxed at whatever your marginal tax rate is.
If the income was reported in Box 7 of the 1099-MISD, then it is classified as self-employment income. It is added to your other income and taxed at whatever your marginal tax rate is, and, in addition you have to pay 15.3% self-employment tax on it.
If the income was reported in Box 7 of the 1099-MISD, then it is classified as self-employment income. It is added to your other income and taxed at whatever your marginal tax rate is, and, in addition you have to pay 15.3% self-employment tax on it.