another way to put this is that you owe about 15% social security/medicare taxes (ie self-employment taxes) on your net schedule C income. if it was $20K you would owe about $3,000 in self-employment taxes + regular taxes on your taxable income of $7K. $3500 in taxes is not out of whack with what you have told us. Now you not only owe the $3500 you also owe penalties and interest for late payment and filing that are increasing every day. file ASAP. and if you can't pay set up a payment plan for an offer in compromise (where you settle your debt for less than the full amount) you may want to see a tax pro. the IRS knows about the 1099-MISc so it likely to only be a matter of time before they ask you to file.
