So, I would specifically discourage you strongly from making any payments to the IRS if your income is limited to Self-Employment income of $5,000. The reason is that both the Earned Income Tax Credit and the Child Tax Credit both require earned income, and not the payment of taxes, be it income or self-employment taxes.
The Earned Income Tax Credit (EITC) is a tax credit that may give you money back at tax time or lower the federal taxes you owe. You can claim the credit whether you’re single or married or have children or not. The main requirement is that you must earn money from a job or self-employment.
The credit can get rid of any federal tax you owe at tax time. If the EITC amount is more than what you owe in taxes, you get the money back in your tax refund. If you qualify for the credit, you can still get a refund even if you do not owe income tax.
See this article for more details: What is the Earned Income Credit? Find Out If You Qualify
The Child Tax Credit is determined by and phases in with one’s earnings: Anyone earning less than $2,500 annually is currently ineligible to claim the credit. Starting at $2,500 in earnings, the credit phases in at a 15% rate, meaning for every $100 earned above $2,500, a taxpayer receives $15 in CTC. For example, a taxpayer with $3,500 in earnings would receive $150 in CTC ($3,500 – $2,500 = $1,000; $1,000 * 15% = $150). A taxpayer with multiple children must phase in the credit amount one child at a time.
See this article for more details:2023 and 2024 Child Tax Credit
So, to summarize neither credit requires the payment of taxes. In effect, the $300 you paid was returned to you as part of the $2,072 refund. The refund most likely would have been $1,772 if you did not make the payment. Unless your self-employment is much higher in 2024, you should not make a payment as neither credit requires a tax payment to be made to qualify for the credits.
Thank you for the opportunity to answer your questions @Zitro
All the best,
Marc T.
TurboTax Live Tax Expert
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