Self-employed making under $12,000 - do I still need to pay if I file taxes voluntarily?

Wait, seriously? I had no idea the threshold was that low for self-employed people! So even though regular employees don't have to file until $12,000, I have to file at just $400? That's a massive difference. How much should I expect to owe on $11,200 of self-employment income? And can I still take the standard deduction to lower what I owe?

Yes, it catches many people by surprise! The $400 threshold is specifically for self-employment tax purposes. The different threshold exists because when you're self-employed, you're responsible for both the employee and employer portions of Social Security and Medicare taxes. For your $11,200 income, you'll first calculate your net profit after business expenses on Schedule C. Then you'll pay about 15.3% of that as self-employment tax. You absolutely can take the standard deduction ($13,850 for single filers in 2024) which would likely eliminate your income tax completely, but you'll still owe the self-employment tax portion. Depending on your specific situation, you might owe around $1,500-1,700 in self-employment tax, but this could be reduced by credits you qualify for.

Does it help identify what business expenses you can deduct? I'm doing photography on the side and have camera equipment, editing software subscriptions, etc., but I'm not sure what's actually deductible.

I've tried a bunch of these AI tax tools and they always seem to miss something major. How accurate is this compared to like a real accountant? Last year I used one of those popular tax websites and ended up amending because they missed a huge deduction.

It definitely helps with business expenses! I'm actually a graphic designer, and it recognized all my Adobe subscriptions, computer equipment, and even my home office space as potential deductions. For photography specifically, it would absolutely cover your camera equipment, software, props, studio space if applicable, and even mileage if you travel to shoot locations. As for accuracy compared to accountants, I was skeptical too. The difference I found is that taxr.ai isn't just doing calculations - it's analyzing tax documents and explaining the reasoning behind each deduction. What impressed me was that it showed the specific IRS rules for each deduction it suggested. My situation wasn't super complicated though, so I can't speak to really complex tax situations.

How does this actually work? Does it just call the IRS for you? Seems like it would be the same wait time either way.

Yeah right. The IRS phone lines are impossible. I've tried calling at all hours and NEVER get through. No way this actually works. Sounds like a scam to get desperate people's money.

It doesn't just call the IRS for you - it uses some kind of system that navigates all the complicated phone menus and then waits on hold in your place. The technology actually keeps your spot in line while you go about your day. When a human IRS agent finally answers, their system calls your phone and connects you directly to that agent. So you skip the whole automated system nightmare and the hours of hold music. I was super skeptical too! I tried calling the IRS three times myself before using this - waited 2+ hours each time and got disconnected twice. With Claimyr, I went to the gym, came home, made lunch, and then got the call that an IRS agent was on the line. It was honestly a huge relief after the frustration of trying to do it myself.

This is really helpful! I don't have any dependents, but even $600 would help offset what I might owe. Does the EITC apply automatically when you file, or do I need to fill out some special form to claim it?

The EITC will calculate automatically if you use tax software, but you'll want to make sure all your income information is entered correctly. If you're filing paper forms, you'll need to fill out Schedule EIC along with your return. Just make sure you meet all the requirements - you need to be at least 25 but under 65 (unless you have qualifying children), have a valid Social Security number, and meet some other criteria. But based on what you've shared, you should definitely qualify! The income limits for 2024 for single filers with no children is $17,640, so you're well within range.

This is partially right but slightly misleading. The QBI deduction doesn't reduce your self-employment tax - it only reduces income tax. Since OP's income is already below the standard deduction, the QBI deduction won't help them much in this specific situation.

This is really helpful clarification! I was getting confused by all the different thresholds and requirements. So just to make sure I understand - even though I made less than $12,000, the $400 self-employment rule means I have to file anyway, and if the return shows I owe money, I can't just ignore it because I filed voluntarily? That's actually kind of reassuring in a weird way - at least now I know there's no loophole I'm missing. And if I might actually get money back with the EITC and other credits, then filing doesn't seem so scary anymore. Thanks for breaking it down so clearly!

Exactly right! You've got it. Once you file that return, the IRS treats it as official regardless of whether you were required to file or not. There's no "take-backsies" just because you filed voluntarily. But honestly, with your income level and the various credits available, you're probably going to come out ahead by filing. The EITC alone could cover most or all of your self-employment tax, and if you have any legitimate business expenses (home office, equipment, supplies, etc.), those deductions will help too. The key is making sure you capture all your deductions and credits. Keep good records of any business expenses - even small things like office supplies, software subscriptions, or mileage can add up. And definitely look into that Earned Income Tax Credit that Anastasia mentioned!

This is exactly the kind of real-world example I needed to hear! It's so reassuring to know that someone in almost the same situation actually ended up with a refund instead of owing money. I've been so focused on the potential tax bill that I wasn't really thinking about all the business expenses I could deduct. Looking back at this year, I definitely have software subscriptions, my home internet (since I work from home), office supplies, and probably some other stuff I'm forgetting. Quick question - for the home office deduction, do you have to have a dedicated room, or can it be like a corner of your bedroom where you work? My setup isn't super formal but it's definitely my consistent workspace. Thanks for sharing your actual numbers too - makes this whole thing feel way more manageable!