Why was I required to pay self employment tax last year. IRS said it was owed and deducted approximately $700 from my refund

[Anonymous · Accepted solution]

how and where  did you enter the self-employment income?   Should have been reported on Schedule C.     If it was entered correctly, TT would have automatically calculated the SE tax.        In addition, certain expenses could have been allowed as a deduction on Schedule C reducing the SE tax.         If you didn't enter the income and expenses on Schedule C, the IRS may be billing you on the gross SE income not the net.     

[good10]

thank you for your response.  I input earnings on Sch C just like years prior.  My net was a negative number therefor I assumed (as per IRS instruction) that it was calculated on Net earnings as we have 2 businesses.  I sent IRS all the info and copy of their instruction and they said it had to be paid on the business that showed a profit not the Net.  I am confused on how to handle this year.  Clearly this is IRS mistake but they didn't believe it was.   

[dmertz]

You say "we" have two businesses, so I assume that you are married filing jointly.  Is one business wholly owned by one spouses and the other business wholly owned by the other spouse?  If so, the spouse with the profitable business owes SE tax.  How many Schedules C were filed for each spouse?  Did each spouse show a combined net loss?

[xmasbaby0]

Did you have income reported on a 1099Misc?  Or did you work as an independent contractor? You are posting from "Self-Employed" software.   If so you pay self-employment tax for Social Security and Medicare, since it is not being paid/withheld from your wages by an employer.

https://ttlc.intuit.com/questions/2902389-why-am-i-paying-self-employment-tax