Question 1

What is self-employment tax?

Accepted Answer

Self-employment (SE) tax covers Social Security (12.4%) and Medicare (2.9%) taxes, totaling 15.3% of net earnings. As a W-2 employee, your employer pays half — but as a 1099 contractor, you pay the full amount. The good news: you can deduct half of SE tax from your income.

Question 2

When are quarterly estimated tax payments due?

Accepted Answer

For 2026, quarterly payments are due: Q1 (April 15), Q2 (June 15), Q3 (September 15), and Q4 (January 15, 2027). If you expect to owe $1,000+ in taxes, you should make quarterly payments to avoid underpayment penalties.

Question 3

What's the difference between 1099-NEC and 1099-K?

Accepted Answer

1099-NEC reports non-employee compensation (freelance/contract payments of $600+). 1099-K reports payment card and third-party network transactions (PayPal, Venmo, etc.) over $600. Both report taxable income, but they come from different sources.

Question 4

How can I reduce my self-employment tax?

Accepted Answer

Top strategies: 1) Deduct all legitimate business expenses to reduce net income, 2) Contribute to a SEP IRA or Solo 401(k), 3) Consider S-Corp election if earning $80K+ to split income between salary and distributions, 4) Claim the home office deduction if eligible.

Question 5

Do I need to file taxes if I made less than $400?

Accepted Answer

If your net self-employment income is under $400, you don't owe self-employment tax. However, you may still need to file a federal return if your total income exceeds the standard deduction threshold ($15,000 for single filers in 2026).

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