How do I report self-employment taxes when there’s no income to report?

How you earn income has a profound effect on your taxes. This article outlines details of self-employment income — and how to report it on your tax return if you operate your business as a sole proprietorship.

What does self-employment mean?

A self-employed taxpayer’s income isn’t derived from a salary or wages paid by a single employer. Instead, they earn income by providing goods or services to other businesses and/or individuals as independent contractors. An independent contractor must be truly independent, and not simply an employee classified as a contractor by an employer.

Taxes on the self-employed

In effect, if you are “self-employed,” you’ve hired yourself as your own employee, and you serve both roles. You are subject to not only income tax on your business’ net income, but also self-employment tax (“SE tax”) on that income. SE taxes are the equivalent of payroll (or FICA) taxes, or contributions to Social Security and Medicare, except that as a self-employed taxpayer, you pay both the employer’s and the employee’s portions of your own income.

However, if you employed one or more employees, you would be required to pay one-half of their payroll taxes based on their salary or wages. Employees are responsible for paying the other half, which withheld from their paychecks.

“How to file if you didn’t make money?”

Generally, taxpayers are required to file if their gross income reaches a certain threshold, based on filing status and age. If you are self-employed, Income from your business is included in your gross income. For 2024, the filing requirement applies if your taxable gross income was at least:

• Single — $14,600 if under age 65, or $16,550 if age 65 or older
• Married Filing Jointly
  • $29,200 if both spouses are under age 65
  • $30,750 if one spouse is under age 65 and the other is age 65 or older
  • $32,300 if both spouses are age 65 or older
• Married Filing Separately — $5 for all ages
• Head of Household — $21,900 if under age 65, or $23,850 if age 65 or older
• Qualifying Surviving Spouse with dependent child filing return — $29,200 if under age 65, or $30,750 if age 65 or older

However, if your net earnings from self-employment are at least $400, you must still file a tax return even if your total gross income is less than the filing requirement amounts shown above. Note that if your net earnings from self-employment were less than $400, and you’re not otherwise required to file a return, you may still benefit in doing so if claiming a business loss, or overpaying of estimated taxes, results in a refund.

Common self-employment forms

As an independent contractor, you’ll likely use the following forms when completing your income taxes:

Common tax forms you could receive: You might receive a 1099-K or a 1099-NEC.  Despite the introduction of Form 1099-NEC in 2020, you may still receive Form 1099-MISC from one or more payers, even if that income should have been reported on the Form 1099-NEC. Regardless, you’ll need to report all self-employment income on your tax return, regardless of the form type you received.

Forms you may need for filing: If you file as a sole proprietor, you will report your business revenue and expenses on Schedule C (Form 1040). You will also need to file Schedule SE to calculate and report the self-employment taxes.

If you have a business entity other than a sole proprietorship or a single member LLC, file a business return instead of reporting your business income on Schedule C. Examples include partnerships (Form 1065) and S corporations (Form 1120S).

More help with independent contractor taxes

Taxes for the self-employed are more complex than a traditional W-2 wage-earning worker. For this reason, it’s important to get help. H&R Block on your side, you can feel confident as you file your taxes as a self-employed person. File with:

• H&R Block Online Deluxe (if you have no expenses) or
• H&R Block Self-Employed Online (if you have expenses).