Taxation is an entirely different story for self-employed individuals, freelancers, independent contractors and 1099 workers. If you are a self-employed individual, you must pay
1099 tax if you earn more than $400 a year from your clients.
Even if you are a W-2 employee, while also working part-time as a freelancer and income from your side hustle exceeds $400, you must file self-employment taxes. You’ll have to fill up
Schedule SE on your regular 1040 tax return form to report this income.
If you're self-employed, you’ll have to pay quarterly estimated taxes, which include income tax and
self-employment taxes. You can use a
quarterly estimated tax calculator to find the exact amount.
If you expect to owe $1,000, for example, in tax at the end of the year, you’ll have to pay quarterly estimated taxes of $250 to
avoid penalties later. If you overpay on your taxes, the IRS will send you the refund amount once you file your annual return.
It’s important to note that while self-employed individuals pay
self-employment taxes quarterly, they only file a tax return once a year. The deadline to use e-filing is April 18, 2023, for the 2022 fiscal year. For the 2023 fiscal year, the deadline is April 15, 2024.