Filing Taxes When You're Self-Employed in Texas

Filing taxes when you're self-employed in Texas comes with one big simplification — no state income tax — and several federal responsibilities that are easy to underestimate. Here's what self-employed Texans should understand about income, expenses, estimated payments, and the self-employment tax.

The Texas advantage: no state income tax

Texas doesn't levy a state income tax on individuals. That means your self-employment income isn't taxed at the state level, and you won't file a Texas state income tax return. That's a meaningful difference from self-employed filers in most other states. Everything below is about your federal obligations, which apply in full.

Self-employment tax, explained

When you're an employee, you and your employer each pay half of Social Security and Medicare taxes. When you're self-employed, you pay both halves — this is self-employment tax, calculated on your net business income. It's separate from, and on top of, federal income tax. Many newly self-employed filers are caught off guard by this extra tax, so it's worth planning for.

Reporting income and expenses on Schedule C

Self-employed income and expenses are typically reported on Schedule C, which nets your business income against your deductible business expenses. The resulting net profit flows to your 1040 and is subject to both income tax and self-employment tax. Keeping clean, categorized records makes this far easier — see our self-employed filing page.

What counts as a deductible expense

Ordinary and necessary business expenses are deductible: supplies, software, professional services, advertising, mileage for business driving, and a home office (where it applies and meets specific rules). The key word is legitimate — not every expense qualifies, and personal expenses are never deductible. We help you capture what's legitimately deductible without overreaching.

Estimated tax payments

Because no tax is withheld from self-employment income, the IRS generally requires quarterly estimated tax payments if you expect to owe above a certain amount at filing time. Skipping them can lead to underpayment penalties and a large bill in April. We help you see whether estimated payments apply to you and how to coordinate them with your filing.

1099s and income without a 1099

Clients who pay you $600 or more in a year generally send a 1099-NEC. But income you earned under that threshold still counts — the absence of a 1099 doesn't make income tax-free. Keep your own records of all client payments so nothing is missed.

Keeping records that hold up

Good records protect you if the IRS ever asks. Keep receipts, mileage logs, bank and credit card statements, and a running summary of income and expenses by category. The more organized your records, the more accurately your return is prepared — and the more confident you can be in your deductions.

Ready to file? Start your intake or book an appointment at our East Houston office.

This article is general educational information about federal tax rules, not tax advice for your specific situation. Confirm current-year requirements with our office or the IRS.