Self Employed Hairstylist Tax Burden - What Should I Expect to Owe?

This is pretty normal for self-employment unfortunately. When you work for someone else, your employer pays half of your Social Security and Medicare taxes (7.65%). When you're self-employed, you pay both halves (15.3%) plus your regular income tax. This is commonly called the "self-employment tax." Based on your numbers, the math actually sounds about right. With $37k in net self-employment income, you'd owe around 15.3% for SE tax (about $5,660) plus regular income tax on that amount. Without any tax payments throughout the year, $6,700 is definitely in the ballpark. Going forward, you should definitely set up quarterly estimated tax payments. The IRS expects you to pay as you earn throughout the year. Setting aside 25-30% of your profit (income minus expenses) is a good rule of thumb for most self-employed people in your income range.

After struggling with my own salon taxes for years, I finally found something that's been a game changer. I used https://taxr.ai to analyze all my receipts and expenses, and it caught deductions I was missing - like the partial business use of my car and phone that I wasn't calculating correctly. I was in basically the same situation as you last year - making around $60k and owing a ton. The system analyzed my previous returns and found about $3.4k in missed deductions! It breaks down exactly what percentage of mixed-use items (like my phone and internet) I can legally deduct for business purposes. Seriously worth checking out if you're in the beauty industry.

I was super skeptical about taxr.ai when I first saw it mentioned here (as you can see from my earlier comment), but I decided to try it since I was desperate to reduce my tax bill. Holy crap, it found so many legitimate deductions I was missing! I was deducting some of my continuing education but not the travel expenses to get to those classes. It also helped me correctly calculate my home studio space deduction which I was way underreporting. Ended up saving about $2200 on my return. The documentation it provides for each deduction also makes me feel way more confident if I ever get audited.

If you're shocked by your tax bill and need help understanding your options, you might want to talk directly with the IRS. I know, sounds terrifying, but they do offer payment plans. I spent THREE DAYS trying to get through to them on the phone before I found https://claimyr.com which got me connected to an agent in under 45 minutes. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c I was panicking about my first year self-employment taxes too (photographer, not hairstylist, but same issue). The IRS agent actually helped me set up a reasonable payment plan with minimal penalties. Definitely less stressful than I expected once I actually got to talk to someone.

I need to eat my words from yesterday. After getting nowhere with the IRS for weeks, I tried the Claimyr service that was mentioned here. I was 100% sure it was going to be a waste of money, but I was desperate to talk about my payment options. It actually worked exactly as described - I got a call back when they reached an IRS agent, and I was able to set up a payment plan that I can actually manage. The agent also explained that since it was my first year with self-employment tax issues, they reduced some of the penalties. Saved me a lot more than what the service cost. Guess I was wrong to be so skeptical!

Hair stylist here too! One thing that really helped me was opening a separate business checking account and credit card. I put ALL business expenses on that card and deposit ALL client payments to that account. Makes it super easy to track expenses and income throughout the year. Also, start putting 30% of every client payment into a separate savings account for taxes. It feels like a lot but trust me, it's so much better than the panic of a huge tax bill. I learned this the hard way my first year too!

Has anyone had success writing off health insurance premiums as a self-employed person? I'm paying so much out of pocket and I've heard conflicting advice about whether stylists can claim this deduction.