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Self-Employment vs Personal Income Tax
My daughter received income on a 1099-MISC. The income looks like it was taxed as both personal income and self-employed income. Is this correct?
Box 7, and the income was for summer contract work in a software testing lab. It was over $400 as well
Ok. So her employer is treating her as an independent contractor. This is self-employed income and she has to pay the self-employment (social security) taxes on the income in addition to the income tax on the net income. She does get to deduct 1/2 of her self-employment tax so her total taxes should not be anymore than had she been a W-2 employee. She just would have been paying her share of the SS taxes in each paycheck instead of all at one time as self-employed.
Enter the 1099-MISC on a schedule C for her 'business'. The net income will flow to line 12 of the 1040. The deductible amount of the self-employment taxes (SE) will flow to line 27 of the 1040 as an adjustment to income.
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