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R
Rick168
February 4, 2024
Question

Why is my tax rate 26.2% of my AGI when I fall in the middle of the 22% tax rate? I paid quarterly 25% as a 1099, married jointly.Thank you for your help.

  • February 4, 2024
  • 1 reply
  • 0 views
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1 reply

M
MinhT1
February 4, 2024

Your income on form 1099-NEC is subject to income tax AND self-employment tax. 

 

Self-employment tax is calculated at 15.3% on 92.35% of your self-employed income and is added to your income tax.

 

This explains your high blended tax rate.

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    R
    Rick168Author
    February 4, 2024

    I thought TT would have broken that down somewhere to avoid confusion.

    However, following your calculations my tax owed should be $2400 less than TT is figuring.

    123,105x92.35%=113,687x15.3%=17394 added to agi 144294=161688x.22 taxable rate = 35,571. 

    Turbo Tax has me at $37933.     

    Am I missing something this year that I have not in the past 15?

    Thanks again

     

     

    M
    MinhT1
    February 4, 2024

    The Self-employment tax isn't added to AGI to be taxed, like in your calculation.

     

    SE tax is a tax which is added to income tax on your taxable income.

     

    Look at the tax table from page 3 of this IRS publication for the income tax on your taxable income, then add self-employment tax to arrive at your tax liability.

     

     

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