Married filing jointly, W-2 + 1099MISC. W-2 ($115,682) gives a tax return of 9,500, adding 1099-MISC ($18,410) reduces tax return to 2,000. Am I doing something wrong?

[RN3]

Hi,

My wife and I are filing our taxes for 2017 under status "married filing jointly". 

I got a W-2 for $115,682.

My wife received a 1099-Misc for $18,410.

When I filled up my W-2 info, the Federal refund shown at top of Turbotax window was around $9,500.

Once I added the 1099-Misc info, the Federal refund reduced to around $2,000. 

Am I doing something wrong? Is it expected to pay almost $8000 tax on the $18,400 income in 1099-Misc?

Please suggest. 

Thank you,

RN

[TomD8 · Accepted solution]

When you entered her 1099-MISC into TurboTax, it should have generated a Schedule C.  Be sure she deducted her business-related expenses on the Schedule C.  Only her net income is taxable.

Also, remember that her 1099-MISC income is subject to the self-employment tax, as well as to ordinary income tax.  The self-employment tax is for Medicare and Social Security.