Negative income 1099 misc

[noahmiller1996]

Son is a full time college stud. We claim him as a depend. He has side job & received 1099misc for $12,389.00. Can he claim standard $12,000 deduct? Even so Turbotax is showing he still owes $1800.00. In addition he has mileage expenses that reduce his income to negative numbers but turbo tax STILL showing he owes $1800.00. Can this be correct?

[ryan-here-to-help]

If your son's income shows as negative income after his mileage expenses, but Turbotax says he owes money, then please validate that the expenses were entered correctly, as this could impact the calculations. If you continue to experience an issue please contact customer support.

[CalebB]

In addition to regular taxes, self employment income (often reported on form 1099-Misc) is subject to self employment tax. The self employment tax rate is 15.3% - or approximately $1895 tax on the income amount you mentioned above. After various adjustments such as the deduction for 1/2 of the SE tax due etc, a tax due of $1,800 sounds pretty accurate.

Also, because you claim your son as a dependent, he will not be able to claim the full $12,000 standard deduction. You can read more details about how a standard deduction is calculated for a person who can be claimed as a dependent here: https://www.irs.gov/taxtopics/tc551

If your son continues to do this work in 2019, it would be a good idea to make quarterly estimated payments, as contractors do not have taxes withheld from their paychecks the same way that employees do.

[noahmiller1996]

Thank you for your answer but if he has expenses of $8000.00 would that not reduce his 1099 misc earnings fromm 12,0000 to only $4,000.00. In other words would his taxable income be on the $4000.00 net instead of the $12,000 total reported on the 1099misc

[CalebB]

As Ryan suggested, it sounds like maybe the expenses are not properly entered - by my estimates, if he had $8000 in qualifying expenses, he should owe only around $600 in Self Employment taxes ($4000 * 15.3% = $612). Please double check the expense entries, and if you are still uncertain about the result it would be good to contact customer support who can help you get everything entered correctly.