When going to E-file, i get 'Check this Entry'. Sch SE-T max deferral line 18 should be blank. line 14 says $5640 under farm optinonal method?

[ryanteggen9]

I did not receive a 1099-misc. i have looked over my income many times. i do not farm. how is their $5640 line 14 entered?

[KathrynG3]

This could be coming from Schedule K-1(Form 1065), Box 14, Code A interacting with any other self-employment income, such as reported from Form 1099-NEC. The farm optional method is in regards to Sch SE.

For your reference, from 2020 Instructions for Schedule SE (2020):

Farm Optional Method

You may use this method to figure your net earnings from farm self-employment if your gross farm income was $8,460 or less or your net farm profits were less than $6,107. Net farm profits are:

• The total of the amounts from Schedule F (Form 1040), line 34, and Schedule K-1 (Form 1065), box 14, code A, minus

• The amount you would have entered on Schedule SE, line 1b, had you not used the optional method.

There is no limit on how many years you can use this method.

Under this method, report in Part II, line 15, two-thirds of your gross farm income, up to $5,640, as your net earnings. This method can increase or decrease your net earnings from farm self-employment even if the farming business had a loss.

For a farm partnership, figure your share of gross income based on the partnership agreement. With guaranteed payments, your share of the partnership's gross income is your guaranteed payments plus your share of the gross income after it is reduced by all guaranteed payments made by the partnership. If you were a limited partner, include only guaranteed payments for services you actually rendered to or on behalf of the partnership.

This may be a question because of initially qualifying to defer a portion of your self-employment tax, before all the details were entered into the return. Once a refund was established, the deferral was no longer an option.

If you return to the section directly, you may not see the screens necessary to adjust this since you no longer qualify for the option. 

The easiest and fastest solution is to enter nothing--leave the response blank.

If you cannot leave the response blank, then first make sure the program is up to date by following these steps:

Step 1:

• TurboTax Online: Close out of the program completely and close the browser. Re-open using an incognito Chrome browser on a PC, not a Chromebook or iPad.
• TurboTax CD/Download: Check for updates--depending on your version, this is found either under the menu item Online or Help.

Step 2:

1. Delete the Sch SE that applies--(Sch SE-T is for Taxpayer, Sch SE-S for Spouse)--by following these steps:
   1. From the left menu, select Tax Tools.
   2. Select Tools.
   3. Scroll to Delete a Form.
   4. Scroll to Sch SE-T and/or Sch SE-S and select Delete.
2. Decide if you want to fully delete your Schedule K-1, or simply review your input carefully. If you choose to delete and re-add, delete it from the Tax Tools area, as described above.
3. Return to the self-employment income & expenses interview in the Income & Expenses section and select Edit/Add.
   1. Select Edit for your business.
   2. Scroll down to Done so that the Sch SE is recalculated. 
   3. Finish any other questions in the self-employment interview and click Continue.
4. Review the return again.
    

If this box cannot be left blank after updates and after deleting Sch SE, and you are still experiencing unexpected results, then there is one more process to try: temporarily trigger a balance due by adding income long enough to decline the SE tax deferral option, then remove the extra income.

These instructions assume you do have a Schedule C. But, if you do not, then you may want to add income to your K-1, instead. The intent of this workaround is to get into a tax balance due position by adding false income long enough to decline the tax deferral, and then remove that false income.

To do this in TurboTax, follow these steps:

Enter a temporary amount as income in the self-employment section that will result in you not having a refund.

1. From the left menu, select Federal.
2. From the Income & Expenses, scroll to Self-employment income & expenses and Edit/Add.
3. At Your 2020 work summary, select Edit.
4. Under INCOME, select Add income for this work.
5. Add Other self-employed income, includes 1099-K, cash, and checks and Continue.
6. At Type of income, enter Temp income to remove deferral and enter a large amount, such as $100,000 and Continue.

Decline to defer any self-employment tax.

1. From the left menu, click on Federal.
2. Click the second tab from the left, Deductions & Credits.
3. Scroll down to Tax Relief related to Covid-19 and Revisit.
4. Select Self-employment tax deferral and select Revisit.
5. Answer Yes at the next screen to get back to Let's start by getting your eligible income
   1. Enter 280/366ths of your income to reflect the income from March 27-December 31, 2021. 
      • This amount should be calculated and entered without the false added income, and will post to Line 18 of Sch SE
   1. Select Continue.
   1. At Tell us how much you'd like to defer, 
      • Enter 0.

Remove the temporary income.

1. From the left menu, select Federal.
2. From the Income & Expenses, scroll to Self-employment income & expenses and Edit/Add.
3. At Your 2020 work summary, select Edit.
4. Under INCOME, select the Trash can icon next to Temp income to remove deferral and Continue.

For more details, see TurboTax Expert @DawnC's answer here, about 2/3 down the page: Resolve Sch SE-T Max Deferral Line 18 must be entered.

[Edited 03/01/2021 | 5:55 AM PST]

@ryanteggen9

[karideee]

I had to follow ALL of these steps to get it to work, but it worked!!! Super helpful.

[MaureenNuccitelli]

I went to forms--then I clicked on Self Employment and went to the yellowed out field that had the zero. could not delete the zero until I doubled clicked on the field which made a pop menu open. scroll to the bottom of that pop up and hit "delete".. Bang. problem solved.