Some jobs use W-2, some use 1099. I do not own a home or have dependents. 1099 puts all income in a higher tax rate. How can I be taxed at a lower rate for my W-2 income?

[xmasbaby0 · Accepted solution]

Your employer would have withheld federal and state tax, and Social Security and Medicare  from your W-2 earnings, so you will be entering those withheld taxes on your return when you enter your W-2.  Your 1099Misc earnings will be taxed for self-employment tax for Social Security and Medicare as well as ordinary income tax.  Just enter all of the information as it appears on your documents and TurboTax will do the calculations.

[Hal_Al]

The W-2 income is entered in a separate place than the 1099-Misc income. When entered properly, the W-2 income is not subjected to Self Employment Tax ("SET). The SET is the reason for the "higher tax rate". on 1099 income

[SweetieJean]

and your marginal tax rate is based upon your total taxable income, regardless of the source.

[fanfare]

The tax rate is progressive. In other words, only income above the threshold for a high rate is taxed at the high rate.

To reduce your self employed income, report business expenses, if any.