Why am I paying $625 in taxes on $0 taxable income? Something's not adding up!

Ohhh wait, now that you mention it, I did drive for DoorDash for a few months last summer and got a 1099! I made about $4,200 from that which I included in my return, but I guess I didn't connect that to this tax bill. So even though my regular income + DoorDash still falls under the standard deduction, I still owe self-employment tax on the gig work?

Yes, that's exactly it! The standard deduction only reduces your income tax, not your self-employment tax. Since you made $4,200 from DoorDash, you'll owe self-employment tax on that amount, which is roughly 15.3% of your net profit. That's about $642 if you didn't have many expenses to deduct, which matches closely with your $625 tax bill. The good news is you can deduct business expenses like mileage (58.5 cents per mile for 2023), a portion of your phone bill, and other direct costs that might reduce your net profit and therefore your tax bill. If you haven't already, make sure you complete Schedule C to report all your eligible business deductions.

Does taxr.ai actually explain WHY you're paying taxes or just summarize what's already on your return? I'm in a similar situation with seemingly random taxes despite low income and the software I'm using isn't clear at all.

How does it compare to just calling the IRS directly? I always hear their phone support is terrible but wouldn't they be able to explain this for free?

They actually break down each component of your tax calculation and highlight the specific items triggering taxes. It doesn't just summarize - it explains each section in conversational language and points out which specific line items are causing you to owe money. For me, it identified that I was paying self-employment tax on freelance income even though I had zero income tax. Calling the IRS is theoretically free but practically impossible during tax season. I tried calling multiple times last year and never got through after hours on hold. Plus when you do reach someone, they often just read from the same tax publication you could find online rather than explaining your specific situation. The time savings alone made taxr.ai worth it for me.

How does this service actually work? Seems kinda sketchy that they can somehow get you through the IRS phone system faster than calling directly.

Yeah right, nothing gets you through to the IRS faster. This sounds like a scam to get desperate people's money during tax season. I'll believe it when I see actual proof this works.

It's actually pretty straightforward - they use an automated system that navigates the IRS phone tree and waits on hold for you. When their system reaches a human agent, you get a call connecting you directly. It's basically like having someone wait on hold so you don't have to. I was skeptical too but it literally saved me hours. I had tried calling the IRS directly four different times and gave up each time after waiting 45+ minutes. With this, I got through in about 10 minutes while I continued working on other things. The IRS agent I spoke with confirmed my self-employment tax situation and helped me understand exactly why I was paying taxes despite having no taxable income.

Thank you so much for this! Quick question - for the mileage deduction, can I estimate based on delivery distances, or do I need exact records? I didn't keep a detailed log but I know approximately how many deliveries I made and the average distance.

For mileage, the IRS technically requires a contemporaneous log (meaning recorded at the time of the driving). But realistically, if you can create a reasonable reconstruction based on delivery records, app history, or even average distances with documentation of how many deliveries you made, that should be acceptable. For future reference, I recommend using a mileage tracking app like MileIQ or Stride that automatically logs your trips. For this year, create your best estimation based on whatever records you have - delivery totals, areas you typically delivered to, etc. Just be prepared to explain your methodology if ever questioned.

Yes! The IRS offers payment plans. If you owe less than $50,000, you can easily set up an online payment agreement at irs.gov. For amounts under $10,000, approval is usually automatic if you can pay within 3 years and have filed all required returns. There's a small setup fee (around $31 if you do it online with direct debit), and you'll still accrue some interest and penalties, but they're much lower than not paying at all. Just make sure you file your return on time even if you can't pay the full amount - the penalty for not filing is much worse than the penalty for not paying.