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    tech27's Avatar
    tech27 Posts: 1, Reputation: 1
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    #1

    Apr 6, 2009, 10:48 PM
    Non Employee Tax
    Hello there,

    In addition to our regular wages, I had done some contract work as well. When I plug in the information in turbo tax I get results that don't make any sense. For Ex: if I put contract income as $0 my total tax is a credit of $3500 (approx). If I put contract income as $10000 my total tax is negative $320 (I owe) and when I put contract income as $17500, it jumps to $4800 as amount owed. Looks like the percentage on the income varies tremendously. Can anyone clarify my doubts please?

    If without any contract income I expect a credit of $3500, and then adding contract income with a business tax of $3200 wouldn't that mean I should get $3500 - $3200 = $300? How does it end up jumping so much that I owe $4800? (almost $8000 difference from initial $3500 credit expected with no contract income)

    Thanks!

    Tech27
    MukatA's Avatar
    MukatA Posts: 7,110, Reputation: 176
    Tax Expert
    		  
    #2

    Apr 7, 2009, 09:29 AM

    On the contract income you pay SE tax at 15.3% plus income is taxed at your regular rate. Make sure to report the contract income.

    Contract Income: You will report your income and expenses on schedule C or C-EZ (Form 1040). Then you put net income (or loss) on line 12 of Form 1040. This income is subject to SE tax at 15.3% (this is shown on line 57 of Form 1040). Half of SE tax is deductible on line 27 of Form 1040. Read: Your U.S. Tax Return: Tax Filing by Self Employed Sole Proprietor or Independent Contractor
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