How come I have a zero taxable income but I owe money?

[NF1]

Total income= $8333

Federal deductions=$18960

Taxable income= $0

Federal credits= $607.

Federal Tax you owe =$1177

Federal taxes you have paid plus certain credits=$607

Balance due =$570.

How can my taxable income be $0 and still owe taxes???

[VolvoGirl · Accepted solution]

What kind of income did you have?  You can owe for other things.  Like a 10% Early Withdrawal Penalty from a 401K of IRA distribution.  Or you can owe self employment tax.  

OK I calculated it.  The $1,177 is exactly the self employment tax on it.  You must have got a 1099Misc for it.  Self Employment tax (Scheduled SE) is automatically generated if a person has $400 or more of net profit from self-employment.  You pay 15.3% SE tax on 92.35% of your Net Profit greater than $400.  The 15.3% self employed SE Tax is to pay both the employer part and employee part of Social Security and Medicare.  So you get social security credit for it when you retire.  You do get to take off the 50% ER portion of the SE tax as an adjustment on 1040 Schedule 1 line 27.   The SE tax is already included in your tax due or reduced your refund.  It is on the 1040 Schedule 4 line 57 which goes to 1040 line 14.  The SE tax is in addition to your regular income tax on the net profit.

[VolvoGirl]

8,333 x .9235 = 7,695.52
Then 7,695.52 x .153 tax = 1,177.00 self employment tax

[NF1]

Thank you! That is exactly the case.

[KrisD]

Penalty tax is added after taxable income.

Do you owe any penalty tax on an IRA distribution? 

[NF1]

I don't owe any penalty tax, but it was self employment income, so I owe SE tax. Thank you for taking the time to look at my question!

[KrisD]

Thank you for using TurboTax.