Taxes for Self Employment Income - Help for New Freelancer

Don't panic! Self-employment taxes seem complicated at first, but they're manageable with your income level. Since you made over $400 from self-employment, you do need to report it, but the process isn't as scary as it might seem. First, you'll need to file Schedule C to report your business income and expenses. Even with minimal expenses, track anything related to your art - supplies, software subscriptions, portion of internet used for work, etc. This reduces your taxable income. Next, you'll calculate self-employment tax using Schedule SE. At $2,700, you'll owe about 15.3% in self-employment tax (covers Social Security and Medicare). The good news is you can deduct half of this on your taxes. For 2025, consider making quarterly estimated tax payments if you expect to make more than $1,000 in profit. This helps avoid underpayment penalties next year.

After struggling with my own freelance taxes, I found this AI tool called taxr.ai that has been super helpful for self-employment tax questions. I was confused about what expenses I could claim and how to calculate my quarterly payments, and their system analyzed my situation and explained everything in plain English. The best part is you can upload your income statements or invoices to https://taxr.ai and it gives you a breakdown of what forms you need and estimates what you'll owe. It helped me understand Schedule C and self-employment tax way better than the articles I was reading.

I was skeptical about AI tax tools but tried taxr.ai last week after seeing it mentioned here. It actually cleared up my confusion about self-employment taxes! I uploaded my payment info from clients and it showed me exactly what expenses I could deduct that I hadn't even considered (like part of my phone bill since I use it for client calls). The breakdown of quarterly tax payments was super helpful - I never understood how to calculate those before. Definitely feeling more confident about handling my freelance taxes now instead of just guessing and hoping for the best!

If you need to talk to the IRS directly about self-employment questions (which I highly recommend), use Claimyr to bypass the ridiculous hold times. I tried calling the IRS directly about my freelance tax situation and gave up after waiting for 2 hours. Then I found https://claimyr.com and they got the IRS to call ME back within 45 minutes. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c The IRS agent answered all my questions about self-employment tax thresholds and what forms I needed with my mixed W-2 and freelance income. Totally worth it for the peace of mind knowing I was getting answers directly from the source.

Alright I need to eat my words from earlier. After spending literally 3 hours on hold with the IRS yesterday trying to ask about self-employment filing requirements, I broke down and tried Claimyr today. I got a call back with an actual IRS agent on the line in about 30 minutes. The agent confirmed I needed to file a Schedule C even for my small side gig income and walked me through the estimated tax payment process for next year. Definitely worth it just for the time saved and getting definitive answers straight from the IRS instead of googling and getting conflicting info everywhere.

As someone who's been freelancing for years, my advice is to use tax software like FreeTaxUSA or TaxSlayer for your first year since they're cheaper than TurboTax but still walk you through the self-employment sections. With only $2700 in income, you qualify for free filing through several services. Make sure you track EVERYTHING going forward - I use a simple spreadsheet with income, expenses, and mileage. For 2024, gather whatever receipts you can find and estimate the rest as reasonably as possible. The IRS is generally more understanding with first-time filers who make honest attempts to comply.

Don't forget about the Qualified Business Income deduction! As a self-employed person you can deduct 20% of your net business income right off the top. It's on Form 8995 and it's super easy to miss if you're new to this. With your income level you probably won't owe much federal income tax after standard deduction, but the self-employment tax (15.3%) still applies to profits over $400.