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:
    • 90.00% 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

What Is Alternative Minimum Tax?

What is the alternative minimum tax, and are you eligible for an exemption? Learn more about AMT rates and get tax answers at H&R Block.

What is adjusted gross income and what is taxable income — What’s the difference between the two?

What is the difference between taxable income and adjusted gross income (AGI)? Learn more from the tax experts at H&R Block.

It’s Giving Season: Gift Tax Basics

It's gifting season, but don't worry too much about taxes. Learn more about gift tax and its requirements at H&R Block.

I have a question about cash gift taxes and gift reporting. My spouse and I each received a cash gift totaling $32,000.

How should you and your spouse report a joint cash gift on your taxes? Learn more from the tax experts at H&R Block.