I worked as a regular employee (laid off in August) and as a consultant in 2012. I entered my W2 and itemized deductions such as mortgage interest and real estate taxes. Because I received a severance check last year that was taxed at a higher rate, my return was projecting at almost $7800 in TaxAct.com.

But after I added my 1099 Nonemployee compensation (box 7) of $13,750 my refund dropped dramatically to less than $2900. What gives? From what I can tell, the tax rate should be somewhere in the range of 13-15%, not 35%! Am I missing something? I am still well below 100K in total earnings for 2012.