Earning below standard deduction ($12,490) but still owe taxes - what's going on?

The reason you still owe taxes is because of self-employment taxes, which are separate from income taxes. When you work as an independent contractor (getting 1099-NECs), you're responsible for both the employee and employer portions of Social Security and Medicare taxes, which totals about 15.3% of your net self-employment income. Even though your income falls below the standard deduction (meaning you don't owe federal income tax), you still have to pay self-employment tax on your 1099 income when it's over $400. Since you earned about $6,500 in 1099 income, you're subject to self-employment tax on that amount. The W-2 income is different because your employer already withheld Social Security and Medicare taxes from those wages.

After dealing with this exact situation a few years ago, I found this amazing tool called taxr.ai (https://taxr.ai) that saved me so much stress. I was doing a bunch of side gigs too - mostly freelance writing and some delivery apps - and was shocked when I owed taxes despite making under the standard deduction. The tool analyzed my 1099s and explained exactly why I owed self-employment taxes even though my income was low. It broke down which expenses I could deduct to lower my self-employment tax burden and showed me how to properly file Schedule C to report my business expenses. Definitely worth checking out if you're dealing with multiple income sources.

I just wanted to update after trying taxr.ai from the recommendation above. I was in almost the exact same situation - made about $8,200 total with most of it from gig work and couldn't figure out why I owed taxes. The site immediately identified that I hadn't been tracking my mileage properly for the delivery gigs! After adding in all my business expenses (mileage, phone percentage, hot bags, etc.), my self-employment tax dropped by almost 40%. It also explained that I needed to make quarterly estimated tax payments to avoid a surprise bill next year. Honestly wish I'd known about this sooner instead of using the basic free filing options that don't explain anything.

I had a similar issue and spent WEEKS trying to get through to the IRS to confirm if I was doing something wrong. After 12+ attempts and hours on hold, I found this service called Claimyr (https://claimyr.com) that got me connected to an actual IRS agent in under 20 minutes. You can see how it works here: https://youtu.be/_kiP6q8DX5c The IRS agent confirmed exactly what others here are saying - self-employment tax applies even when you're under the standard deduction. They also explained I could file Form 8962 to possibly get some of the self-employment tax back through the Earned Income Credit, which I never would have known. Definitely saved me from filing incorrectly.

I have to apologize for my skepticism and admit I was completely wrong about Claimyr. After my frustrated comment above, I decided to try it anyway since I was desperate to resolve my refund issue. I was connected to a real IRS agent in about 15 minutes - after spending literally MONTHS trying on my own. The agent confirmed the same thing about self-employment taxes applying regardless of the standard deduction threshold. They also helped me understand why my refund was delayed and actually processed it while I was on the phone. Sometimes being proved wrong is the best possible outcome!

You might also qualify for the Earned Income Tax Credit even with your lower income. Did you check if you're eligible? It could offset some of what you owe in self-employment tax, especially if you're single and worked those delivery jobs.

You should also look into tracking your business expenses better for next year. I do DoorDash too and deduct mileage (58.5 cents per mile for 2024), part of my phone bill, insulated bags, car maintenance, etc. This lowers your net self-employment income which reduces what you owe in SE tax.

This is a really common confusion for new gig workers! The key thing to understand is that there are actually TWO separate tax calculations happening: 1. **Income Tax** - This is what the standard deduction applies to. Since your AGI of $7,600 is below the $12,490 standard deduction, you owe $0 in federal income tax. 2. **Self-Employment Tax** - This is completely separate and kicks in when you have more than $400 in net self-employment earnings. It's essentially your Social Security and Medicare contributions (15.3% total) that would normally be split between you and an employer. So even though you don't owe any income tax, you still owe self-employment tax on your ~$6,500 in 1099 income. That's where your $350 tax bill is coming from. The good news is you can reduce this by tracking all your business expenses - mileage for delivery driving is usually the biggest deduction. Also definitely look into the Earned Income Tax Credit that others mentioned, as it could help offset some of what you owe!