Thank you for your question. As stated in the text of it you will have W2 income and that income will be reported as usual. The new item will be the Schedule C income with an estimated net income of $40K. The $40K I am assuming is net income since you stated after expenses. The schedule C income will be added to ordinary income and included to your taxable income calculation. In addition, you will have to pay 15.3% in self employment tax on the net income of the business. The net income is a combination of social security and medicare taxes. I would recommend to file quarterly estimate tax payment since the income and tax liability will be above thresholds that may incur penalties and interest if not filed in a timely fashion. I will include two links below. The first link is the irs 1040S that includes explanation of calculation, vouchers, and due dates. In addition, a tax estimator to see how your overall taxes will be impacted and estimated. I hope this helps and answers your question.
1040ES
Tax Estimator
