Filing requirement for self-employment income

Posted on Posted in Taxes

Suppose your only income comes from a work-from-home part-time project and it only amounted to a few thousand dollars last year. Do you need to file an income tax return? Yes, says the IRS: “You must file Form 1040 if you owe any self-employment tax.”  Confusion comes from the fact that low-income earners may be exempt from income tax. But self-employment tax is a separate issue that does require filing. This is considered self-employment income.

Consider two additional points:

1) This filing requirement does not actually mean that you will owe any tax. In many cases the situations as described above the earned income credit would offset the self-employment tax.

2) Filing a self employment tax return, even at a small amount, may help you qualify for social security benefits so this works in your favor.

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