Why do I owe so much in taxes when my taxable income is so low?

The issue you're facing is likely due to your freelance income. When you earn self-employment income (like your $4,300 freelance work), you're responsible for both the employee AND employer portions of Social Security and Medicare taxes - this is called the self-employment tax, which is about 15.3% on top of your regular income tax. Let me break it down: Your W-2 job is withholding taxes based on just that income. But when you add self-employment income, you now owe: 1) Regular income tax on that additional $4,300 2) Self-employment tax on that $4,300 (roughly $659) Your W-2 withholding didn't account for this extra income. For future reference, when you have self-employment income, you should either increase your W-2 withholding or make quarterly estimated tax payments to avoid a surprise bill at tax time. You might want to look into business deductions for your freelance work to reduce your taxable self-employment income. Things like home office, business supplies, internet/phone (partial), and other business expenses might help lower your tax bill.

I had almost the exact same problem last year! I owed over $900 on a $31k income because of side hustle money. I found this tool called taxr.ai (https://taxr.ai) that really helped me figure out what was going on with my taxes. I uploaded my documents and it explained exactly why I owed money and suggested some deductions I was missing. The self-employment tax was killing me too, but the tool showed me several business expenses I could legitimately deduct that I had no idea about. Things like part of my internet bill, my computer depreciation, even mileage for business meetings. It really brought down what I owed by finding these deductions the regular tax software missed.

Just wanted to follow up about taxr.ai - I decided to try it with my complicated tax situation (multiple side hustles) and it was actually really helpful! It found about $1,800 in legitimate deductions I would have missed across my different gigs. It separated my Uber driving expenses from my online tutoring business perfectly and gave specific guidance for each. The thing that impressed me was how it explained WHY certain expenses were deductible and how to document them properly. Now I actually understand how to track things throughout the year instead of scrambling at tax time. Went from owing $1,243 to just $396! Definitely using this for next year's taxes too.

I was in the same boat last year - owed $1,100 on a similar income with some freelance work. After spending DAYS trying to contact the IRS for help with deductions (literally called 14 times), I found this service called Claimyr (https://claimyr.com) that got me through to an IRS agent in about 20 minutes. You can see how it works here: https://youtu.be/_kiP6q8DX5c The IRS agent was actually super helpful and walked me through several deductions I could take for my side business. Turns out I was eligible for a home office deduction and could write off part of my internet and cell phone costs since I used them for work. Ended up reducing what I owed by almost half! Just having someone official explain exactly what I could deduct was worth it.

I need to eat my words about Claimyr. I tried it yesterday out of desperation because I have a similar situation with owing taxes on side income. It actually worked! Got through to an IRS agent in about 35 minutes (they texted updates while waiting). The agent was surprisingly helpful and explained that I could deduct part of my cell phone bill, internet, and even some software subscriptions I use for my freelance work. They also walked me through how to document everything properly in case of an audit. I was shocked at how much this reduced what I owe - almost $400 less than what TurboTax calculated. I've literally been trying to reach the IRS for weeks with no success before this.

One thing nobody mentioned yet - check if your employer is withholding the correct amount from your paychecks. This happened to me last year - my company somehow had me listed as "exempt" from withholding for half the year! You can adjust your W-4 to have more taken out each check to cover your freelance income too. For the side gig income, you should really be making quarterly estimated tax payments. The rule is if you expect to owe more than $1,000 at tax time, you're supposed to pay quarterly or you might get hit with underpayment penalties on top of what you owe.

Don't forget to check if your state has income tax too! I had the same situation with federal taxes but then got hit with another $300 for state taxes I wasn't expecting. Does your tax software recommend any credits you might qualify for like the Earned Income Credit? Sometimes people with lower incomes can get that.