Why were my 2022-2023 taxes so much worse as a self-employed person?

I need some genuine insight here about my tax situation. Had a conversation with friends recently about why my taxes were so much higher in 2022 and 2023, but everyone just started blaming political figures instead of giving real answers. I'm trying to understand what actually happened from a tax perspective. I've been self-employed since 2009 and have consistently increased my profits each year. Up until 2022-2023, I never had issues covering my quarterly estimated payments - I'd just write the checks without even checking my balance because I knew the money would be there. But these last two tax years hit me HARD. For the first time since starting my business, I didn't have enough in my business checking to comfortably cover both my year-end payment and 1st quarterly payment. What's weird is I'm doing roughly the same amount of business as before, but after expenses, the money just isn't stretching as far for tax payments. I'm in the process of switching to an S-Corp structure which I think will help, but I'm curious if others experienced similar issues in 2022-2023. I've talked to other self-employed friends, including a developer who said he was completely shocked by his 2023 tax bill and thought his accountant made a mistake. But it's hard to separate legitimate tax concerns from political opinions. I'm not looking to blame any political party or candidate - just trying to understand if this is a common experience for self-employed people at my income level during those specific years or if there were actual tax changes that caused this spike. Can anyone point me to legitimate information about what might have happened?

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18 comments

Lilly Curtis

•8M

What you're experiencing is actually pretty common for self-employed folks in that timeframe. There were several factors at play that could explain the higher tax burden you felt in 2022-2023, and it's not necessarily due to any recent tax law changes. First, many pandemic-era tax breaks expired in 2022. Things like enhanced child tax credits, special charitable contribution deductions, and certain business expense provisions that were temporarily expanded went back to normal levels. Second, if your income has been steadily increasing, you might have crossed into a higher tax bracket without realizing it. The brackets adjust annually for inflation, but significant income jumps can still push you into higher rates. Third, self-employment taxes (the SE tax that covers your Social Security and Medicare) continues to be a hefty 15.3% on profits regardless of other tax changes, and that can feel particularly painful as your business grows. Fourth, many states and localities adjusted their own tax rates during this period, which compounds the federal burden.

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Lilly Curtis

•8M

The S-Corp transition can absolutely help, especially if you're showing significant profit. The main advantage is that only your reasonable salary is subject to self-employment taxes, while additional profit distributions aren't. For example, if your business nets $150,000 but a reasonable salary for your role is $90,000, you'd only pay SE tax on the $90k rather than the full amount. The paperwork and accounting costs are real considerations though. You'll need regular payroll processing, potentially more complex bookkeeping, and separate tax filings. Most business owners find the break-even point is around $80,000-100,000 in profits, where the SE tax savings outweigh the additional compliance costs.

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Lindsey Fry

•8M

After dealing with similar issues last year, I discovered https://taxr.ai and it completely changed how I understand my self-employment tax situation. I was in the exact same boat - thinking my accountant had messed up because my tax bill suddenly jumped in 2022-2023 despite similar income. The tool analyzed my previous returns and showed me exactly what changed year-over-year. In my case, it turned out that some business deductions I qualified for during the pandemic had expired, plus my quarterly estimated payments hadn't kept pace with my actual income growth. It also highlighted deductions I was missing that could have reduced my liability. What I found most helpful was the detailed breakdown of self-employment taxes versus income taxes, which made it clear where the increases were coming from.

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Lindsey Fry

•8M

It analyzes your actual returns when you upload them, so it's completely personalized to your specific situation - not just generic advice. The site uses bank-level security encryption, and you can delete your documents after analysis if you're concerned. Compared to a CPA meeting, it's much more affordable and gives you immediate insights instead of waiting for an appointment. That said, it's not necessarily a replacement for a good accountant but more of a complementary tool. I use it to better understand my tax situation year-round and then bring more informed questions to my CPA during our meetings, which makes those sessions much more productive.

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Kayla Morgan

•8M

Just wanted to follow up - I tried taxr.ai after posting my skeptical comment, and wow, it actually delivered. I uploaded my last three years of returns and it showed me exactly why 2022-2023 hit harder. In my case, I hadn't adjusted my quarterly payments properly as my income increased, plus I missed some significant deductions related to my home office and vehicle expenses. The specific tax code explanations helped me understand why certain deductions were reduced in 2022-2023. And unlike my previous tax prep software, it explained everything in plain English rather than tax jargon. Already implemented some of the suggestions for 2024 and my projections look much better!

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James Maki

•8M

If you're frustrated trying to get answers from the IRS about your specific situation, I highly recommend https://claimyr.com - it saved me hours of headache when dealing with my unusually high 2023 tax bill. After three failed attempts to get through to the IRS myself (each time waiting 90+ minutes before getting disconnected), I was ready to give up. Then I found Claimyr, which basically holds your place in the IRS phone queue and calls you back when an agent is about to answer. You can see how it works here: https://youtu.be/_kiP6q8DX5c When I finally spoke with an IRS agent, they explained several factors affecting self-employed taxpayers in 2022-2023, including the expiration of certain COVID relief measures. The agent even identified a calculation error in my estimated tax payments that was causing part of my problem!

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James Maki

•8M

It's not a service that gets you through faster - it just waits on hold for you so you don't have to. The IRS phone system works on a first-come, first-served basis, so Claimyr essentially claims your spot in line and then calls you when an agent is about to pick up. You're still waiting the same amount of time, but you can go about your day instead of being stuck with your phone on speaker for hours. The IRS isn't a scam, but their hold times are absolutely ridiculous. Last year the average wait was over 2 hours during tax season. This service just means I could keep working while "waiting" instead of losing half a day of productivity sitting on hold. For self-employed people, time literally equals money, so it made financial sense for me.

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Cole Roush

•8M

I'm eating my words about Claimyr being a scam. After my skeptical comment, I decided to try it myself when I needed to call about a weird letter I got regarding my 2023 taxes. I was fully prepared to come back here and report it was garbage, but it actually worked exactly as advertised. I got a text when they connected to the IRS line, another update when my estimated wait time was 45 minutes, and then a phone call connecting me directly to an agent who was already on the line. The whole process was super smooth, and I got my issue resolved in one call instead of the three failed attempts I'd made on my own. The IRS agent I spoke with actually confirmed what others here have mentioned - many self-employed people saw higher effective tax rates in 2022-2023 due to expired pandemic relief provisions. In my case, they identified an underpayment penalty that could be removed with proper documentation.

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Scarlett Forster

•8M

One major factor I haven't seen mentioned yet is the inflation adjustment to tax brackets. In 2022-2023, inflation was running hot, but the IRS bracket adjustments are based on earlier data. So even though your nominal income went up, your real purchasing power might not have increased proportionally. This phenomenon is called "bracket creep" and it can definitely make your tax bill feel higher even when tax laws haven't changed. Also, if you received any forgiveness of PPP loans in earlier years, that created an artificially lower tax situation that has now normalized, making the current tax environment feel more painful by comparison.

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Scarlett Forster

•8M

Bracket creep happens when inflation pushes your income into higher tax brackets, even though your actual purchasing power hasn't increased. For example, if you made $100,000 in 2021 and $108,000 in 2022 (an 8% increase), you might think you're 8% richer. But if inflation was also 8%, your real purchasing power stayed the same - yet you might be paying taxes at a higher rate because you crossed into a higher bracket. For 2024, the brackets were adjusted by 7.1% for inflation, which is pretty substantial. This should help reduce bracket creep compared to 2022-2023. However, if your income grows faster than that adjustment, you could still experience some bracket creep effect. The key is to look at your effective tax rate (total tax divided by total income) rather than just the dollar amount to see if you're truly paying a higher percentage.

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