Home |IRS Tax Return | If my self-employed income is $12,000 or less, am I exempt from paying income tax to IRS on top of the 15% self-employment tax?

If my self-employed income is $12,000 or less, am I exempt from paying income tax to IRS on top of the 15% self-employment tax?

Robert James, 20+ years of experience in IRS matters
Answered on September 20,2023

When you are self-employed nobody is collecting taxes for you. You are supposed to make estimated tax payments instead, which should be done on a quarterly basis to avoid any underpayment penalties.

Form 1040-ES has the due dates for each quarter and other information:

About Form 1040-ES, Estimated Tax for Individuals

Your estimated payments should include the estimate for SE tax as well as any income tax.

If you pay too much - for example you thought you were going to make $15k, but then only had a net profit of $10k, you would get a refund for any overpayment of your estimated payments. That part is the same as getting a refund from overwithholding at a W-2 job.

This website has some guides that you might find helpful - it can feel really overwhelming because it's a very different situation than being a W-2 employee. These guides have done good basic information about how to organize your income and expenses.

MyFreeTaxes Self-Employed Tax Guides

You have to decide for yourself if it's worthwhile being self-employed compared to a W-2 employee. It's easier to be a W-2 employee if you aren't making that much money, although some people need the flexible schedule that can come with self-employment.

If my self-employed income is $12,000 or less, am I exempt from paying income tax to IRS on top of the 15% self-employment tax?

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