This Is the Hardest Part of Being Self-Employed for Me

Many or all of the products here are from our partners that compensate us. It’s how we make money. But our editorial integrity ensures our experts’ opinions aren’t influenced by compensation. Terms may apply to offers listed on this page.


  • I love the flexibility self-employment gives me.
  • But there's one major downside that definitely messes with my head from time to time.
  • It can be very difficult to predict my tax liability. 

Self-employment is great, but it has some drawbacks.

I made the decision to become self-employed many years ago, and since then, not once have I regretted it. Do I miss the steady paycheck I used to get as a salaried employee? Sure. Do I miss getting paid to take vacation, or, more importantly, being entitled to paid time off to recover after getting sick? Absolutely.

But all told, I love the flexibility that comes with self-employment. I'm able to save money on childcare by virtue of getting to take a late-day break during the week to collect my kids from school. And I like being able to work from anywhere so if I'm willing to hammer out stories on the beach with the sand between my toes, so be it.

However, if there's one thing I really don't like about being self-employed, it's my tax situation. And unfortunately, there's not much I can do to change it.

A major challenge

Most of my friends get to jump for joy when they file their annual tax returns, as they'll commonly be told by their accountants that a refund will soon hit their bank accounts. I, on the other hand, almost always owe the IRS money when filing my annual tax returns. And it's not because I'm doing something wrong per se.

When you're self-employed, it can be very difficult to predict your tax liability with precision. A lot of factors go into that number, including the amount I earn, the amount of interest I get in my savings account, the amount of capital gains I've incurred in my brokerage account, and so forth. As such, I've gotten used to the fact that I will, inevitably, owe the IRS money.

Now, that in itself isn't so bad. In fact, I'd actually rather owe the IRS money than get a large refund because the latter scenario would mean giving the government an interest-free loan for nothing in return. That's not something I'm eager to do.

Rather, the problem is that every time I earn money, I can't help but wonder how much of it I'll actually get to keep. And that can be frustrating.

Say I decide to take on an extra project so my family can take a vacation. I might spend hours in a given month working until all hours of the night and come out with an extra $3,000 as a result. 

But at that point, it can be hard to know how much of that $3,000 I'm free to spend. Will I owe the IRS $1,000 of that? $1,200? $1,500? It's just hard to nail down. And so any time I earn extra money, it comes with a side of "be careful how you spend this," even when it's supposed to be fun money my family can enjoy.

Erring on the side of caution

Because I'm used to owing the IRS money when I file my taxes, I always err on the side of caution. In the example above, I may decide that of my extra $3,000 in earnings, I'm really only free to spend $1,500 -- even when, in reality, my cut is probably higher. But the last thing I want is to get stuck with an IRS bill I can't afford to pay in full. 

The IRS commonly gives people who can't cover their tax bills extra time to pay -- but at a cost. Since I'm not a fan of wasting money on interest, I choose to play it safe. But sometimes, that frustrates me and just plain bums me out.

Alert: our top-rated cash back card now has 0% intro APR until 2025

This credit card is not just good – it’s so exceptional that our experts use it personally. It features a lengthy 0% intro APR period, a cash back rate of up to 5%, and all somehow for no annual fee! Click here to read our full review for free and apply in just 2 minutes.

Our Research Expert

Related Articles

View All Articles Learn More Link Arrow