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sophia-chrys
February 16, 2023
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Why is the standard deduction of 12,950$ not being subtracted from self employment income (less than 15K), resulting in tax owed of close to 20% of the income, for 2022?

  • February 16, 2023
  • 1 reply
  • 0 views
I reported a small self employment income of under 15K (I am a college student) and turbotax claims that I need to pay 2K in taxes, even after applying the standard deduction (of 12,950$). That makes little sense
Best answer by CatinaT1

When you are self-employed, you pay both income tax on your income and self-employment tax on your profit. 

 

Your standard deduction reduces you income to determine your taxable income. You income tax is calculated from this.  

 

Self employment tax 15.3%. Your standard deduction can not reduce self-employment tax.

 

Below are a couple of links that might be useful to you. 

About Schedule C 

Self Employed Individuals Tax Center 

1 reply

CatinaT1
CatinaT1Answer
February 16, 2023

When you are self-employed, you pay both income tax on your income and self-employment tax on your profit. 

 

Your standard deduction reduces you income to determine your taxable income. You income tax is calculated from this.  

 

Self employment tax 15.3%. Your standard deduction can not reduce self-employment tax.

 

Below are a couple of links that might be useful to you. 

About Schedule C 

Self Employed Individuals Tax Center 

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