Why do I have to pay self-employment taxes when my taxable income is 0?

My adjusted gross income is about $6000. With the standard deductions, my taxable income is zero. Turbo Tax says I owe over $1500 in taxes. If this were W-2 income and not self-employment wages (1099), I wouldn't owe any taxes for this year so why do I still have to pay so much?

Why do I have to pay self-employment taxes when my taxable income is 0?
You have to report self-employment tax if your adjusted gross income is $400 or over. If you were self-employed, and your net profit was 6000, you would owe c. 600 for regular Federal income tax and $847.77 for Self- employment, which is nothing but social insecurity tax. You will receive a credit for one-half of that on the front of your IRS Form 1040.


The reason the tax seems so high is probably because you did not send in estimated tax. Be sure to send in 100% of your 2007 income tax liability or 90% of your estimated 2008 income tax liability, spread over 4 quarters.





Begin saving all your receipts and keep records of all of your business related expenses if you have not done so already. You will have to go over your canceled checks and all you did last year to come with deductions that will knock down your income tax liability.
Reply:the best place i have found for turbotax q and a


http://www.tkqlhce.com/im65shqnhp47C7555...
Reply:I would check that you put 6,000 and not 60,000.





Or perhaps thats you tax payable before tax credits.
Reply:Not true - if it were W-2 income you would have ALREADY paid the social security and medicare - half of it would have been taken out of your paychecks (and you wouldn't get it refunded) and the other half would have been paid by your employer. Social security and medicare are charged on ALL of your income, not just the taxable income.
Reply:SE tax is based on net self-employment income.





The fact that your AGI and taxable income is lower is of no consequence.
Reply:I'm assuming your were an independent contractor of some sort receiving a 1099. There were no taxes taken out of your checks, so you need to pay at the end of the year.





If you had been an employee and rec'd a W-2 you wouldn't have had as much in your paycheck because the company would have taken out taxes. And you probably wouldn't owe.





I am an independent consultant with The Pampered Chef and I get a 1099 every year. You have to remember to set aside money from your checks to pay for the taxes at the end.





If you need more help, email me at chefkathy08@yahoo.com.
Reply:This tax is 15.3% of net business income and represents social security and medicare payments, not income tax. When you work for someone you pay 7.65% out of your check and your employer matches that. When you are a contractor/1099 worker no one is paying that amount weekly. The only way that number will go to zero is if you have no business profit or a business loss. Make sure you have taken all the allowable deductions against that 1099 income on your Schedule C so the self-employment tax is as low as it can be.