Why is TurboTax telling me I owe $613 federal tax on less than $7000 income?

[paulharv66]

My son is using Turbo Tax Free Edition.

He entered $1,400 for a college job reported on a W2 and $5,500 reported as "other income" on a 1099-MISC.

It is calculating that he owes $613 in federal taxes.

It calculates a standard deduction of less than $2,000 which I don't get - the standard deduction for single under 65 is $12,200.

Any idea what he/we are doing wrong?!

...Bigger question is...do we even need to do this?! No tax was withheld so he's not going to get a refund. Since he's under the $12,200 threshold he doesn't actually need to file, right?

[rjs · Accepted solution]

Since your son is in college I assume that you can claim him as a dependent. (It doesn't matter whether you actually do claim him. The question is whether you can claim him.) The filing requirements are different for someone who can be claimed as a dependent, and he does not necessarily get the same standard deduction as someone who cannot be claimed as a dependent.

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@paulharv66 wrote:

Since he's under the $12,200 threshold he doesn't actually need to file, right?

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Not right. The $5,500 of "other income" on the 1099-MISC is unearned income. Someone who can be claimed as a dependent is required to file if his unearned income is more than $1,100. So your son does have to file.

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@paulharv66 wrote:

It calculates a standard deduction of less than $2,000 which I don't get - the standard deduction for single under 65 is $12,200.

If you can claim your son as a dependent, his standard deduction is limited to his earned income plus $350. Only the $1,400 on the W-2 is earned income, so his standard deduction is $1,400 + $350 = $1,750.

[paulharv66]

Ah, I see now. Thanks. That's not good news but it's accurate and well explained! Thank you so much.

[ebsmith]

Can I get some help with a similar situation, please.  

We claim my daughter as a dependent, she is a college student.

I do her taxes separately.

She received a W2 for 5K with $437 withheld in federal taxes.

She received a 1099 for $1499 from a fellowship.

If I enter the 1099 amount, her refund is reduced to only ~$200,

If I don't enter the 1099 she gets the whole $437 refund.

Since she made less than 7K shouldn't she get the whole refund?

Any help is appreciated...............

[VolvoGirl]

She probably owes the separate self employment tax on the 1099Misc.  Or it needs to be entered a different way.  I don't know how fellowships are taxed.

 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.