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I'm currently filing with TurboTax for my first (official) year as a freelancer and had a question about how my tax owed is being calculated. I just do this stuff on the side (full-time student), so that's why I'm not super familiar with how it works for self-employed income.

Anyways, I'm filing as a single person and my total income for 2019 was $3,639. My federal deductions are $3,972. In addition to this, I wrote off the equipment -- laptop, camera, etc. -- that I use for my work.

However, TurboTax is still spitting out that I owe $462 in federal tax and $58 in state tax. How does this add up if my deductions are greater than my income? Am I missing something totally obvious? (My apologies if I am.)

Any help would be much appreciated.

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    Are you treating this as a business? (That is, putting income & expenses on Schedule C.) Then you might owe Self Employment tax, which is separate from income tax: irs.gov/taxtopics/tc554 It's what would be deducted from your paycheck as FICA if you were an employee: covers Social Security, Medicaid, &c. Another possibility might be if you are being treated as a dependent by your parents. – jamesqf Mar 26 at 4:38
  • I believe that it is being treated as a business, yes. Is there any way to avoid that? – user95412 Mar 26 at 4:49
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    There's probably not a way to avoid it (other than just not declaring the income and hoping the IRS doesn't notice :-)), but you could look at whether there are more expenses you could legitimately deduct, e.g. home office deduction. Also, if this is something you intend to keep on doing, it's useful to show profitable years in case you have a non-profitable one. – jamesqf Mar 26 at 18:04
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This is probably why:

Self-Employment Tax Rate

The self-employment tax rate is 15.3%. The rate consists of two parts: 12.4% for social security (old-age, survivors, and disability insurance) and 2.9% for Medicare (hospital insurance).

So you're probably not paying any Federal Tax, but you still have to contribute to other taxes. $462 is less than 13% of your income.

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