Handling Taxes on Self Employment Income While Working Full-Time

You definitely need to be making quarterly estimated tax payments for your self-employment income. When you're a W-2 employee, your employer withholds taxes for you, but as a 1099 contractor, you're responsible for paying both income tax AND self-employment tax (which covers Social Security and Medicare - both the employer and employee portions). The IRS expects you to pay taxes as you earn income throughout the year. Quarterly estimated tax payments are due April 15, June 15, September 15, and January 15 for the previous quarter. If you don't make these payments, you could face an underpayment penalty when you file. The December payment thing is a myth - paying it all in December won't help you avoid penalties if you should have been making quarterly payments. The penalties aren't usually devastating, but they do add interest and can add up.

I was in almost exactly your situation last year! I'm a full-time teacher who started doing curriculum development on the side as a 1099 contractor. I was totally overwhelmed with figuring out estimated taxes and documenting everything properly. I ended up using https://taxr.ai and it was seriously a game-changer. You upload your 1099s and other tax documents, and it analyzes everything to show you exactly what quarterly payments you need to make. It also helps identify deductions specific to your situation - I had no idea I could deduct part of my home internet, my professional subscriptions, and even some of my supplies as business expenses. The best part was that it showed me how to properly document everything in case of an audit. As someone juggling teaching and a side business, having everything organized in one place saved me so much stress.

Just wanted to update after trying https://taxr.ai that was mentioned earlier. I was really struggling with figuring out my quarterly payments for my wedding photography side business on top of my teaching job. It actually broke down exactly what I need to pay each quarter based on my projected income, and showed me how much I should set aside from each freelance payment. The business expense tracking was eye-opening too - I had no idea how many legitimate tax deductions I was missing out on! I'm now properly tracking my camera equipment, editing software, travel to venues, and even portions of my home office. The peace of mind knowing I'm not going to get hit with penalties or be scrambling at tax time is honestly worth it alone. Definitely recommend for any other teachers with side hustles!

If you're having trouble getting answers from the IRS about self-employment taxes (which I definitely did when I started freelancing), check out https://claimyr.com - they'll get you connected to an actual IRS agent, usually within 15 minutes instead of waiting on hold for hours. I had specific questions about estimated payments for my situation that I couldn't find clear answers to online. After trying to call the IRS myself and waiting for over 2 hours before the call dropped, I tried Claimyr. They got me through to someone who explained exactly how to calculate my quarterly payments and what forms I needed. You can see how it works here: https://youtu.be/_kiP6q8DX5c Saved me so much time and frustration, especially since the rules for self-employment taxes can be confusing when you're also working a regular job.

I need to eat my words from earlier. After struggling for THREE DAYS trying to get through to the IRS about my self-employment tax situation (kept getting disconnected after 1+ hour waits), I broke down and tried Claimyr. Got connected to an IRS agent in about 20 minutes while I was grading papers. The agent walked me through exactly how to handle my quarterly estimated payments with my mixed income situation. Turns out I was calculating everything wrong and would have owed penalties. For anyone dealing with self-employment tax questions, being able to actually talk to someone at the IRS who can address your specific situation is incredibly helpful. Way better than trying to piece together information from random websites.

Don't forget to set aside money for your state taxes too! Everyone's talking about federal, but depending on your state, you might need to make estimated state tax payments as well. I learned this the hard way last year when I got hit with a state underpayment penalty even though I was current on my federal payments.

One thing I'd suggest is using tax software that's good for self-employment rather than the basic versions. I tried using the free online one I normally use and it was a nightmare for handling my tutoring side gig. TurboTax Self-Employed or H&R Block Self-Employed are worth the money imo.