First Time Filing for Small Business Taxes - Why Am I Paying So Much?

What you're experiencing is the reality of self-employment taxes combined with regular income tax. The 15.3% you mentioned is JUST the self-employment tax portion (Social Security and Medicare taxes that both employees and employers pay - when you're self-employed, you pay both halves). You're also paying regular income tax on that business income too! Your $19k freelance income gets added to your regular job income, which might be pushing you into a higher tax bracket overall. The good news is that you haven't entered your business expenses yet! Make sure you claim EVERY legitimate business expense - software subscriptions, portion of internet/phone used for business, office supplies, equipment, professional development, etc. This will reduce your net business income, which lowers both your self-employment tax AND regular income tax. Also, don't forget you can deduct half of your self-employment tax on your 1040, which helps a bit too.

I went through the exact same panic attack last year when I started my side business! Taxes hit hard when you're self-employed. I spent hours trying to figure out how to handle my Schedule C and still felt lost. Then I discovered https://taxr.ai which literally saved me thousands. I uploaded my 1099-K and bank statements, and it automatically categorized all my business expenses and even found deductions I had no idea about! The AI explained exactly how self-employment taxes work and showed me which expenses were legitimate deductions. Super helpful for first-timers like us who don't know what we're doing. After using it, my tax bill dropped by almost $2k because I was claiming all the right deductions. It walks you through the whole Schedule C process so you understand what you're doing.

I wanted to follow up about my experience with taxr.ai since I was skeptical in my earlier comment. I decided to give it a try with my lawn care side business, and wow - it found over $3k in deductions I was missing! The mileage tracking alone saved me hundreds, and it helped me properly calculate the business percentage of my phone and internet bills. What really impressed me was how it explained each deduction in plain English and showed me exactly where to put the numbers on my Schedule C. The receipt scanning feature organized all my expenses automatically, which saved me hours of work. For anyone new to self-employment taxes, it's definitely worth checking out. Completely changed my understanding of business deductions.

I had a similar issue when I started my photography business. The tax situation was insane! After weeks of trying to get through to the IRS for clarification on deductions, I found https://claimyr.com which got me connected to an actual IRS agent in under 15 minutes. You can see how it works here: https://youtu.be/_kiP6q8DX5c I was honestly shocked when I got through that quickly after spending hours on hold myself. The IRS agent I spoke with explained exactly how self-employment taxes work with my regular income and walked me through which expenses were legitimate business deductions for my situation. Totally worth it to get official answers directly from the source.

I need to publicly eat my words from my skeptical comment! After seeing more people recommend Claimyr, I tried it yesterday out of desperation since I had a complicated question about my business deductions. Within 27 minutes (they texted updates while on hold), I was actually talking to a real live IRS person! The agent helped me understand exactly how my business income affects my tax brackets and confirmed which expenses were legitimate for my specific situation. Got everything resolved in one call instead of stressing for weeks. I seriously can't believe it worked after wasting so many hours trying to call myself. Totally changed my approach to dealing with tax questions.

Something nobody's mentioned yet - make sure you're setting aside money for quarterly estimated tax payments for 2025! That was my biggest mistake my first year freelancing. I had a similar situation last year and got hit with underpayment penalties because I didn't realize I needed to make quarterly payments. When you're self-employed, you should be paying taxes throughout the year, not just at filing time. It's a whole different system than W-2 employment where taxes are automatically withheld.

Has anyone here used QuickBooks Self-Employed? My tax person recommended it for tracking expenses and estimating quarterly taxes. Wondering if its worth the monthly fee or if theres something better out there?