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missttaylor8
New Member

On the maximum deferral of self employment tax payments part 3 line 18, I don't understand

I don't understand what they're asking me for. it states enter the portion of line 3 that can be attributed to march 27, 2020 through december 31, 2020
4 Replies
AnnetteB6
Employee Tax Expert

On the maximum deferral of self employment tax payments part 3 line 18, I don't understand

This question is associated with the option to defer paying some of your self-employment tax due to Covid.  

 

If you do not want to defer any of the self-employment tax, then enter '0' for line 18.  

 

If you do wish to defer paying the self-employment tax, then line 18 is asking for the portion of your Schedule C and/or Schedule F profit that is attributed to March 27, 2020 through December 31, 2020.  

 

Here is some information from the TurboTax help content that should give you a better explanation of what you might need to enter:

 

How do I calculate my eligible income?

 

The amount of the self-employment tax that is eligible for deferral depends on your net income from 3/21/2020 to 12/31/2020.

 

If you made roughly the same amount each month, calculating your eligible income is easy. Just grab a calculator and multiply your net self-employment income by 0.775.

 

If your income was not consistent from month to month, you'll need to do some extra math to find your eligible income. You can still use the amount we gave you for your net self-employment income, but you'll need to subtract the net income your earned between 1/1/2020 and 3/20/2020. Remember, your net income is what you earned minus any expenses.

 

Here are some examples:

 

Example 1: John's annual gross income from self-employment work last year was $60,000 and he had $6,000 in expenses.

 

First, John needs to figure out his net income for the year. He does this by subtracting his total expenses from his gross income ($60,000 - $6,000). This gives him a net income of $54,000.

 

Next, John needs to figure out his net income from 1/1/2020 through 3/21/2020. His total income during this period was $20,000 and he had expenses of $1,000. He subtracts his expenses from his income ($20,000 - $1,000) to get $19,000 in net income for this period.

 

Now John can figure out his eligible income. He subtracts his net income from 1/1/2020 through 3/21/2020 from his total net income ($54,000 - $19,000). This gives him eligible income of $35,000, which is the amount he enters as income eligible for tax deferral.

 

Example 2: Jane is self-employed and has already entered all her income info into TurboTax, which shows her total net self-employed income as $54,000.

 

Jane had a slow start to the year, and only earned $2,000 between January 1st and March 21st. She also had $2,000 in expenses. She subtracted her expenses from her net income ($2,000 - $2,000), which gives her a net income of $0 for that period.

 

Janes eligible income for the self-employment tax deferral is $54,000 ($54,000 - $0).


 

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mitch5773
New Member

On the maximum deferral of self employment tax payments part 3 line 18, I don't understand

I can't efile my taxes because it keep saying my Max deferral is too large.

The number I have in line 18 box is "0". How can "0" be too large? Please fix or advise.

jkmt
New Member

On the maximum deferral of self employment tax payments part 3 line 18, I don't understand

It kept asking me to enter a figure on this line, but I don't want to defer. I cannot get back to this part of the manual entry of this schedule. 

When I go to the Tax Relief related to Covid-19, Self-employment tax deferral screen, it says I am getting a refund, so I can't defer, but the only reason I am getting a refund is BECAUSE it asked me to make an entry in that screen previously and now is calculating a refund. I DO NOT WANT to defer, but I can't get back into that manual entry screen for SE.

AmyC
Employee Tax Expert

On the maximum deferral of self employment tax payments part 3 line 18, I don't understand

The only solution for your unique situation is to delete the worksheet causing the problem. See How to Delete  You may even need to delete Sch 3. The program will hold on to information it thinks is critical. Good luck!

 

 

@jkmt

@mitch5773 try a blank instead of zero.

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