This is a common question for taxpayers who earn income but are not employed by someone else and do not receive Form W2.

Generally, you are self-employed if you are in a business for yourself, which includes a part-time business. You carry on a trade or business as a sole proprietor or an independent contractor. Or you are a member of a partnership that carries on a trade or business.

As a self-employed individual, generally you are required to file an annual return and pay estimated tax quarterly.

Self-employed individuals generally must pay self-employment tax (SE tax) as well as income tax. SE tax is a Social Security and Medicare tax primarily for individuals who work for themselves. It is similar to the Social Security and Medicare taxes withheld from the pay of most wage earners. In general, anytime the wording "self-employment tax" is used, it only refers to Social Security and Medicare taxes and not any other tax (like income tax).

Your self-employment tax and income tax is based on your business’ net profit or net loss. You do this by subtracting your business expenses from your business income.

You have to file an income tax return if your net earnings from self-employment were $400 or more. If your net earnings from self-employment were less than $400, you still have to file an income tax return if you meet any other filing requirement. See Form 1040 Instructions.

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