USA I don't get it! How is it that a 66 yr old with an income of 7k has to pay $1600 in taxes?

[TomDonohoe]

I'm working on tax year 2022 return. Married, filing seperately, Independent contractor with income of $7,400, & ACA Form 1095. According to the Free File programs, I owe $1,600! How can that be?

 

[BIG E]

Because it's possible that for ACA calculation the credit taken for premiums was too low and now you have to pay the difference.
Also - married filing separately usually produces a higher income tax because the tax rate structure is different than 1/2 married filing jointly. I suggest you look at the ACA calculation forms
Also you owe self-employment tax on the self-employment income that you may not have paid estimates for during the year.

 

[TomDonohoe]

Thank you. It appears that you are correct. It's still baffling to me how it makes that with a standard deduction of $12,950, an come of 7,400 is taxed at 21%! I must be missing something!

 

[BIG E]

Could it be that you are overlooking the fact that your Social Security income is taxable (if you are collecting Social Security benefits)

Also the amount you claim for standard deduction for 2023 is incorrect- it's $ 13,850

 

[TomDonohoe]

No Social Security income.(Standard deduction. $12950 because a 2022 return.)
Doesn't seem right to me...

 

[Samir]

I would look over the form and instructions line by line and see what is being accounted for incorrectly. You may still owe due to the self-employment tax, etc stated earlier, but then you will know exactly why.