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Your first year self employed

Your first year has a tax trap. Here it is.

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Updated October 8, 20262 sourcesFact checked
The short answer

In your first year on your own, no one withholds your tax. Estimated payments are due four times a year, and self employment tax adds 15.3%.

4Estimated tax payments a year: April 15, June 15, Sept. 15 and Jan. 15.Source: IRS: Estimated tax due dates

You owe self employment tax once net earnings reach $400.

If you expect to owe $1,000 or more, you should pay estimated tax during the year.

Paying 100% of last year's tax through estimates can avoid the underpayment penalty, even in your first big year.

Steps that help

  • Open a separate account for tax money.
  • Pay something every quarter.
  • Use our self employment tax calculator.

Help that may fit

Payment plan: Pay what you owe a little each month.Penalty relief: Ask the IRS to remove late filing or late payment penalties.Unfiled returns: Catch up on old returns before the IRS files for you.

Results depend on your situation. Not every case qualifies.

Common questions

Can I get help if I already owe?

Yes. A tax pro can look at payment plans, penalty relief and other options for your case. Results depend on your situation. Not every case qualifies.

Sources

  1. IRS: Estimated tax due dates
  2. IRS: Estimated taxes

Run the numbers with our free tax tools, like the penalty and payment plan math.

See your options

A few questions. A tax pro calls you back.

Free tools: penalty calculator, 10 year clock, IRS offer data

Free to use. Not the IRS or any government agency. Results depend on your situation. Not every case qualifies.