Solved: Worked as an independent contractor, TurboTax shows I owe federal $204 but also shows I owe my state $0. Confused.
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henryle95
New Member

Worked as an independent contractor, TurboTax shows I owe federal $204 but also shows I owe my state $0. Confused.

I have only been an independent contractor for 2018 and I'm not sure if how much I owe is correct. My compensation is $1503 and I owe federal $204 after deductions. Would I really owe my state nothing at all? State is also California.

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PhyllisG
New Member

Worked as an independent contractor, TurboTax shows I owe federal $204 but also shows I owe my state $0. Confused.

Yes.  The federal tax bracket and filing requirements do differ from the state of California. 

As an independent contractor you are required to file a Form 1040 Schedule C or a Schedule C-EZ if your income is $400 or more. You are then allowed to deduct expenses that are related to your business.  If the net amount of your business income equals $400 or more, then you are subject to self-employment tax.  This could be one of the reasons the end result differs because California does not have a self-employment tax. Or, it could simply be your tax liability (taxes you were required to pay) met California's threshold.  This would also result in -0- taxes.

Another reason that you may owe taxes is if you received a penalty for not having the required health insurance under the Affordable Care Act.  The penalty is a federal only penalty.  It is not assessed by California.  

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1 Reply
PhyllisG
New Member

Worked as an independent contractor, TurboTax shows I owe federal $204 but also shows I owe my state $0. Confused.

Yes.  The federal tax bracket and filing requirements do differ from the state of California. 

As an independent contractor you are required to file a Form 1040 Schedule C or a Schedule C-EZ if your income is $400 or more. You are then allowed to deduct expenses that are related to your business.  If the net amount of your business income equals $400 or more, then you are subject to self-employment tax.  This could be one of the reasons the end result differs because California does not have a self-employment tax. Or, it could simply be your tax liability (taxes you were required to pay) met California's threshold.  This would also result in -0- taxes.

Another reason that you may owe taxes is if you received a penalty for not having the required health insurance under the Affordable Care Act.  The penalty is a federal only penalty.  It is not assessed by California.  

View solution in original post

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