Will I owe taxes on 1099 income if I only made $5.3k from my side gig?

So I've been doing some freelance graphic design on the side to help pay for grad school expenses. I just totaled up my earnings for the year and it came out to about $5,300 from this one company that's going to send me a 1099. This is my first time dealing with 1099 income - I've always just had W-2 jobs before where taxes were automatically taken out. I also have my main job at a retail store that will probably come out to around $28k for the year (with taxes already withheld). Do I definitely need to pay taxes on this small amount of 1099 income? I've heard something about a threshold but I'm not sure if that applies to my situation since I have other income too. I'm worried about getting hit with a big tax bill when I file next year. Is there some kind of minimum amount before you have to pay taxes on 1099 work? Or will I definitely owe something on this $5.3k? Any advice would be super helpful!

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19 comments

Ava Thompson

•8M

Yes, you'll likely owe taxes on your 1099 income even though it's only $5,300. There isn't a minimum threshold that exempts 1099 income from taxation when you have other income sources like your W-2 job. For 1099 income, you'll need to pay both income tax and self-employment tax. The self-employment tax is about 15.3% (covers Social Security and Medicare taxes that would normally be split between you and an employer). The income tax portion will depend on your overall tax bracket when combined with your $28k job. The good news is you can deduct business expenses related to your freelance work. Things like software subscriptions, equipment, portion of internet used for work, etc. These deductions can reduce your taxable 1099 income before calculating what you owe. You'll report these expenses on Schedule C when you file.

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Ava Thompson

•8M

The $12,000 threshold (actually $12,950 for 2022) applies to your total income, not just 1099 income. Since you already have $28k from your W-2 job, your total income is well above the filing threshold. Yes, the 15.3% self-employment tax is in addition to regular income tax. However, you can deduct half of your self-employment tax on your 1040, which helps reduce your income tax slightly. And definitely track those business expenses - they directly reduce your taxable 1099 income before calculating both taxes.

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Zainab Ali

•8M

Hey, I was in almost your exact situation last year! I was freaking out about owing a ton on my side gig income until I found taxr.ai (https://taxr.ai) and it seriously saved me money. I uploaded my 1099 and it analyzed everything and pointed out deductions I had no idea I could claim for my freelance work. The tool walked me through all the business expenses I could write off - even partial things like my phone bill and home internet since I used them partly for work. Ended up reducing my taxable 1099 income by like 30%! It specifically looks for self-employed deductions that most people miss.

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Zainab Ali

•8M

You upload your tax documents and it uses AI to analyze everything looking for deductions and credits specific to your situation. It's especially good with 1099 income because it knows all the self-employment deductions. And yes, it can help even with spotty records - it asks questions to help you reconstruct what you likely spent on your business. For the self-employment tax question - absolutely! It specifically calculates your self-employment tax and shows how deductions reduce both that AND your regular income tax. It creates reports you can use with any tax software or give to your tax preparer - I downloaded the PDF and just followed it when filing with TurboTax.

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Connor Murphy

•8M

Wanted to update after trying taxr.ai - actually pretty impressed! I uploaded my 1099s and answered their questions about my side gig (driving for food delivery). It found so many deductions I wasn't tracking properly like mileage, part of my phone bill, car insurance, etc. I was seriously about to just report my full 1099 amount with no deductions because I thought I didn't have receipts for everything. The system showed me I could legitimately deduct about $1,800 from my $4,700 in gig income, which saved me around $500 in taxes! The reports it generated made it super clear what I could claim and why. Definitely using this next year too and actually tracking things better.

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StarGazer101

•8M

If you're really worried about taxes on your 1099 income, another issue you might run into is getting stuck on hold with the IRS forever if you have questions. I spent HOURS trying to reach someone last year about my freelance tax situation. Finally discovered Claimyr (https://claimyr.com) which basically calls the IRS for you and then connects you once they get a human on the line. Check out how it works: https://youtu.be/_kiP6q8DX5c. Honestly thought it sounded fake but I was desperate after being on hold for 2+ hours multiple times. They got me through to an actual IRS agent in about 20 minutes when I needed clarity on some 1099 deductions I was unsure about. Saved me from potentially making an expensive mistake on my taxes.

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StarGazer101

•8M

They use an automated system that continually calls the IRS using their dial system algorithm until they get through to an agent. It's not about "special access" - they're basically just doing the hold waiting for you so you don't have to sit there for hours. Once they get an agent, they call you and connect you directly to that agent. They don't just charge you to wait on hold - you only pay if they actually connect you to an IRS representative. If they don't get through, you don't pay anything. I was skeptical too but when you've tried calling the IRS multiple times and couldn't get through, it's worth it just to get your questions answered and move on with your life.

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Yara Nassar

•8M

Ok so I have to eat my words and admit when I'm wrong. After my skeptical comment, I was still struggling to get through to the IRS about my 1099 situation (been trying for WEEKS), so I tried Claimyr out of desperation. Not only did they actually get me through to an IRS agent in about 30 minutes, but the agent was able to confirm that some of my business deductions were legitimate that I was unsure about. Turns out I was being too conservative with my deductions and was about to overpay by almost $800. The time saved alone was worth it - I would have been on hold for another 3 hours otherwise based on my previous attempts. Sometimes being proven wrong is actually a good thing lol.

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Paolo Romano

•8M

Don't forget that you might need to make quarterly estimated tax payments for your 1099 income going forward if you continue the side work. The IRS generally wants you to pay taxes as you earn income (which happens automatically with W-2 jobs through withholding). If you expect to owe more than $1,000 in taxes from self-employment income, you should be making quarterly payments to avoid an underpayment penalty. For a lot of side gigs, increasing your withholding at your main job can sometimes cover it too.

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Paolo Romano

•8M

You can use Form 1040-ES to calculate your estimated tax payments. It's not always as simple as dividing by 4, especially if your income isn't steady throughout the year, but that's a reasonable starting point if your freelance income is fairly consistent. Yes, your quarterly payments should cover both the income tax and self-employment tax. The IRS doesn't distinguish between them for estimated payments - they just want the total tax paid throughout the year. Another option is to increase your W-2 withholding by submitting a new W-4 to your employer, which can sometimes be easier than managing separate quarterly payments.

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