Fema Employment

How can "self-employment" taxes on $1980.00 reduce my return by $557?

How can "self-employment" taxes on $1980.00 of my self-employment income be high enough to reduce my federal tax refund from $580 to $23? Does this sound right?I've filled out all the appropriate forms (1099-MISC, Schedule-C, Schedule-SE, etc.) THANKS, EVERYONE!!

Public Comments

1. Because you are, in effect, paying the income tax, Social Security and Medicare taxes that would be deducted if you were salaried.
2. Easy: 15% Income Tax = $297 Self Employment Tax = $280 15% Tax Savings from Deducting 1/2 of SE Tax = $21 $297 + $280 - $21 = $556 (Net Tax on $1980 in Self-Employment) (Sorry.....$1 off due to rounding).
3. It is right. Because by being self-employed you have to pay both the employer and employee portions of taxes. Wayne Z is the man!
4. Because you have to pay a self employment tax. Self employment taxes are higher than regular taxes. Yes it sounds right. I had my refund reduced by over $700 due to self employment taxes last year.
5. If you are self employed, you should be able to deduct expenses related to your job which will in turn, up your refund.
6. The SE tax itself would be around $279 so would decrease your refund only that amount., But you also pay income tax on it, so that could explain it if you are in a 15% tax bracket.