Twin Cities Business Daily

Expenses more than income with 1099- Misc. Will I have to pay taxes or receive a refund?

I am trying to help my sister do her taxes and her expenses outweigh her income by a large margin (she earned 6,621.01 and her expenses come to 14, 010.22) We are using turbo tax and it says she owes 955 dollars. Are we doing something wrong or is turbo tax right?

Public Comments

1. Without examing her return it's impossible to say. Depends upon how TT handled the expenses. And that depends upon how you entered the information.
2. Don't confuse business expenses with personal deductions. When you say TT says 14010.22 are you looking at the screen that shows her total deductions? Tax generated from a 1099 is self employment tax - the net profit amount on the Schedule C (pull up that form and look at it) is what that tax is based on. That goes to line 12 on her 1040. Then comes her standard deduction and personal exemption. While her taxable income and income tax due could easily be $0 she may have self employment tax due. The only way to reduce self employment tax is through the business expenses on Schedule C.