Question

1009-NEC

Forum|Forum|3 years ago
April 8, 2023
1 reply
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My son is an independent contractor. He got a 1099-NEC with $0 in taxes withheld. When I enter his comp in TuboTax shows that he owes money. We have entered numerous business expense items but it isn't impacting what he owes the Fed or State. Am I doing something wrong?

S

ShirlynW

It depends. Without looking at his return, I cannot give a definite answer.

The income tax system is a pay as you go system. Taxes are withheld from the employee's paycheck or estimated taxes are paid by the individual during the year.

When you’re self-employed, you are paid the full amount you earn. Nothing is deducted from your check for Social Security and Medicare taxes. Instead, you make estimated tax payments during the year to pay your SE tax and your income tax. If you don’t make estimated tax payments, then you pay these taxes when you file your return.

If you’re self-employed, you can claim a federal deduction for half the SE tax you pay, which can help lower your taxes.

The SE tax rate is 15.3% with 12.4%for Social Security and 2.9%for Medicare.

We report your SE tax on Schedule SE and also calculate the deduction that goes along with it.

The income and expense show be reflected on Schedule C. This link addresses Schedule C.

TurboTax 2022 Form 1040 - Schedule C Tutorial - YouTube

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