Question

Total Deductions are larger than Total Income so how can I owe taxes?

Forum|Forum|4 years ago
April 10, 2022
1 reply
0 views

Total Income is $11.9K and total deductions are $13.3K. Turbo Tax is saying my federal taxes i owe is $1,568. I thought it would be $0 owed and I would be getting any taxes withheld back. Does this sound correct?

F

FangxiaL

If the $11.9k income includes self-employment income, it is possible that you owe self-employment tax and even if you don't have any income tax liability.

If that is not your case, double-check that you entered your W-2 form correctly.

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D

Dan-The-ManAuthor

We do have self-employment income so will take a look further into that. Thanks for your help, much appreciated!

VolvoGirl

Employee

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 (If it is 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 (FICA). So you get social security credit for it when you retire.

The SE tax is already included in your tax due or reduced your refund. It is on the 1040 Schedule 2 line 4 which goes to 1040 line 23. The SE tax is in addition to your regular income tax on the net profit.