Not because of the side business alone. If your net earnings from self-employment are under $400 for the year, you owe no self-employment tax and that income does not by itself require a return. But the IRS says you still have to file if you meet any other filing requirement, and then the business income goes on Schedule C. ProfitDrawer's side hustle income and expense tracker keeps the totals that show your net figure.
The $400 test uses net earnings from self-employment, not total sales:
- Start with sales or fees received.
- Subtract your business expenses to get your profit.
- Multiply the profit by 92.35% to get net earnings from self-employment.
So $400 of net earnings is about $433 of profit ($400 / 0.9235).
Example (example numbers only): you sold $900 of crafts and spent $560 on supplies and fees. Profit is $340, and net earnings are $340 x 92.35% = $313.99. That is under $400, so no self-employment tax is due.
Those other filing requirements are set out in the Form 1040 instructions. If you file a return for any reason, report all of your self-employment income on it, even small amounts. Payment apps may send a Form 1099-K, and whether or not one arrives, the income still has to be reported when you file. General information, not tax advice.
Source: IRS: Self-employed individuals tax center · Updated
Tools and spreadsheets for this
Related questions
- What is self-employment tax and how much is it in 2026?
- When will a payment app send me a Form 1099-K?
- What business expenses are tax deductible?
- How much should I set aside for taxes if I am self-employed?
- How do I keep track of business expenses in a spreadsheet?
- When are small business taxes due in 2027?
All questions on ProfitDrawer Answers →
General information, not tax, legal or financial advice. Check the rules for your state and your situation.