Minimum income for self employment tax filing

[CapKam]

What is the minimum self employment income before it is required to report to the IRS for self employment tax consideration?

[Wendy S]

Hello CapKam,

Thank you for your question today.

To address your specific question regarding filing a tax return to report self-employment income, you have a filing requirement if you had net earnings from self-employment of at least $400.  (information received from the IRS 2020 Instructions 1040, page 12, Chart C – Other Situations When You Must File, Item 3) For your convenience, I am including a link to this document.  https://www.irs.gov/pub/irs-pdf/i1040gi.pdf

You should also file to report all income regardless of the source and amount.  The IRS does receive copies of any 1099 MISC, 1099 NEC and 1099Ks that report income to you.   Disregarding these documents may result in receiving communication from the IRS.

[NancyDrew]

You must file an income tax return if you net earnings from self-employment were $400 or more.  If your net earnings were less than $400, you still must file an income tax return if your total income exceeds certain thresholds.  This will depend on factors such as your gross income, age and filing status. 

Here is a link to a great article that describes in more detail who needs to file an income tax return:  Does Everyone Need to File an Income Tax Return? 

[CapKam]

This is in regards to fashion modeling bookings through an agency. In the past the agency has not created a 1099 because the booking amount is less than required for them to report it (I.e. $375). So if no 1099 is created by them, no tax reporting is needed correct?

[NancyDrew]

No. You need to report all earned income from a side job, freelance work or any other self-employment, including fashion modeling bookings.  Even if you didn't receive a 1099-NEC or 1099-MISC, you are still required to report any cash, personal checks or credit card payments related to your self-employment income.

[CapKam]

Thanks for the feedback. If the total income was $200 on a 2018 return and we didn’t report it because we didn’t know we had to, do we need to contact the IRS to have it addressed? 

[shirleyh88]

Hello CapKam!

Thank you for your question.  As a self-employed (SE) individual, you are required to file a Form 1040 if your self -employment income is $400 or above.  

You are also required to pay the SE taxes when you earn money on your own outside of a W-2 employer. 

Self-employment tax is a tax consisting of Social Security and Medicare taxes primarily for individuals who work for themselves. It is similar to the SS and Medicare taxes withheld from the pay of most wage earners. You calculate SE tax by using Schedule SE (Form 1040 or 1040-SR). You can deduct the employer-equivalent portion of your SE tax in figuring out your AGI. Wage earners cannot deduct SE and Medicare taxes.

Please refer to the below article regarding filing Form 1040 if you are self-employed:

https://blog.turbotax.intuit.com/self-employed/do-i-need-to-file-a-1040-if-im-self-employed-33045/ 

Please let me know if this answers your questions, or if I can be of further assistance.

Thank you!

Shirleyh88

[NancyDrew]

Thanks for your additional response, shirleyh88!