If I were to file 5000 self employment income at the end of the year what would the penalty be with irs?

I earned the above amount and want to see about getting the earned income credit or tax credit will they deduct what I owe from it?



There are a number of factors that would be considered in determining an answer to your question that you have not provided the necessary information. Your filing status and number of dependents if any would be chief among those factors. If the $5,000 was your only income you would owe a maximum of $765 in SE tax. If for some reason you had credits that exceeded that amount they would deduct the SE tax from your refund amount. Most folks that have self employment have some expenses to off set the gross income so your SE tax would likely be less.




Your tax return will be prepared with this and any other income you received during the year. You will file a Sch. C to report your self-employment income and deduct the expenses you have for this income. Then the net income will be carried to Sch. SE to determine your self-employment taxes.





So if you qualify for Earned Income Credit, which is a refundable credit, this credit could help offset the amount of tax you owe due to the self-employment. As long as you report all your income correctly along with all allowable expenses deducted, you will normally not have a penalty. You could if you owed over $1000 on the income tax return.





Laura H ?H%26amp;R Block ?Senior Tax Advisor 5


**This advice was prepared based on our understanding of the tax law in effect at the time it was written as it applies to the facts that you provided.




There is no penalty, but your income will be taxed. Probably at the 15% bracket with another 7.5% for self employment tax. Hope you saved some.




There is no penalty for filing your taxes on time and honestly.


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