Question

I have a question about reporting self-employment income. How much self-employment income do I need to earn before having to pay quarterly estimated taxes?

Answer

Regarding reporting self-employment income, you usually must make estimated tax payments if both of these apply:

  • You expect to owe tax of $1,000 or more when reporting self-employment income on your return.
  • You expect your withholding and credits to be less than the smaller of:
    • 90% of the tax you paid on last year’s return (110% of the tax you paid if your adjusted gross income (AGI) for last year was $150,000 or more — or $75,000 if you’re married filing separately)
    • 90% of the tax you estimate on your current year return (66 2/3% for farmers and fishermen)

Estimated tax is the method you use to pay tax on income not subject to withholding, including:

  • Self-employment income
  • Interest
  • Dividends
  • Alimony
  • Rent
  • Gains from asset sales
  • Prizes and awards

You also might have to pay estimated tax if the amount of income isn’t enough that you’re withholding from your:

  • Salary
  • Pension
  • Other income

Estimated tax is used to pay both income tax and self-employment tax, as well as other taxes and amounts on your return. If you don’t pay enough by the due date of each payment period, you might be charged a penalty. This applies even if you’re due a refund.

Your self-employment income minus expenses might be 400 or more. If so, you’re required to file Schedule SE to calculate self-employment taxes.

Related Topics

Related Resources

Garage Sale Money and Capital Gains: What You Should Report to the IRS

Do capital gains apply to garage sale money? The answer depends on a number of factors. Learn more at H&R Block.

For Pro Golfers, Tough Taxes Are Par for the Course

Professional golfer taxes can be complicated and confusing. Learn more about tricky golfer tax issues like travel deductions and residency rules with H&R Block.

How Renting Out Your Extra Bedrooms Affects Your Taxes

Thinking about renting out a room in your home? Learn more about the potential tax implications with the experts at H&R Block.

How do I calculate taxable income?

Finding your taxable income is an important part of filing taxes. Learn how to calculate your taxable income with help from the experts at H&R Block.