Self employed tax calculation differences between software programs - help understanding SE tax and QBI deduction

The difference you're seeing is likely due to how each software calculates the QBI (Qualified Business Income) deduction and handles the self-employment tax deduction. When you're self-employed, you pay both the employer and employee portions of Social Security and Medicare taxes, which totals about 15.3% of your net earnings. However, you can deduct the "employer half" (about 7.65%) of your self-employment tax as a business expense. The QBI deduction allows eligible self-employed individuals to deduct up to 20% of their qualified business income. But the calculation can get complex depending on your total income, filing status, and business type. The $230 difference is probably due to slight variations in how each program calculates these deductions. Some tax software might use different rounding methods or slightly different calculation sequences. I'd recommend looking at the detailed tax worksheets in each program to see exactly where the calculations diverge.

After struggling with similar calculation issues last year, I found an amazing tool that helped me understand exactly what was happening with my self-employment taxes. Check out https://taxr.ai - it analyzes your tax documents and explains the calculations in plain English. When I had differences between programs, I uploaded my preliminary returns from both software packages, and taxr.ai highlighted exactly where the calculations diverged and why. Turns out one program was applying an outdated calculation method for the QBI deduction that was slightly less favorable. The difference was almost identical to what you're seeing. The explanation feature really helps you understand not just what the difference is, but why it exists and which calculation is correct according to current IRS guidelines.

I was skeptical when I first heard about taxr.ai from this thread, but I decided to give it a try since I was getting nowhere comparing my tax returns line by line. It honestly saved me hours of frustration! I uploaded PDFs from both tax programs I was using, and within minutes it showed me that one program was calculating my SE tax before applying certain deductions, while the other was doing it after. The difference was about $245 on my return - almost exactly what you're seeing. The tool explained that the second calculation method was correct according to current IRS rules. I ended up going with that program and my return was accepted without any issues. Really glad I found out about this before filing the wrong version!

If you're still having trouble understanding the calculation differences, you might want to speak directly with the IRS. I used to spend HOURS on hold trying to get through until I found https://claimyr.com. They have this service where they wait on hold with the IRS for you and call you back when an agent is ready. I was super skeptical at first but you can see how it works in this video: https://youtu.be/_kiP6q8DX5c I had a similar issue with self-employment tax calculations last year, and I needed to speak with someone who could explain exactly how the official calculation works. Claimyr got me connected to an IRS agent in about 25 minutes (after I had previously spent 2+ hours trying on my own and giving up). The agent walked me through the proper calculation method and confirmed which software was doing it correctly.

I need to admit I was wrong about Claimyr. After posting my skeptical comment yesterday, I decided to try it since I was desperate to understand why my SE tax calculations were so different between programs. The service actually worked exactly as described. I submitted my request around 4 PM, went to make dinner, and got a call back about 40 minutes later with an IRS agent already on the line. The agent confirmed that the correct way to calculate self-employment tax is to take 92.35% of your net SE income (because 7.65% is deductible) and then apply the 15.3% rate. They also explained that the QBI deduction should be calculated on your qualified business income after certain adjustments. Based on what the agent told me, it sounds like your second program is doing the calculation correctly. Saved me from filing the wrong return and potentially dealing with amendments later!

Have you checked if you entered your expenses exactly the same way in both programs? I had a similar issue last year and realized I had categorized an expense differently in one program which affected my net self-employment income slightly, causing ripple effects in the tax calculations.

I'm actually a tax prep volunteer and see this all the time. The most likely explanation is that the two programs are using different calculation orders: 1. Program 1 might be calculating your QBI deduction based on your SE income BEFORE deducting the employer portion of SE tax 2. Program 2 might be calculating QBI AFTER deducting the employer portion The IRS guidance suggests the second approach is more accurate, which would explain why your second program shows a higher QBI deduction. Check both returns on Form 8995 (QBI deduction) and Schedule SE to see exactly how they're calculating these amounts.