Many people who are blind or have low vision choose self-employment as a way to create income opportunities that fit their skills, schedules, and accessibility needs.
For many, this may include freelance work, consulting, contract work, or other forms of 1099 income.
While self-employment provides flexibility, it also comes with additional responsibilities, including managing your own tax payments.
Unlike employees who receive a W-2 and have taxes automatically withheld from each paycheck, self-employed workers generally need to make their own estimated tax payments throughout the year.
Failing to pay enough tax on time can result in penalties and interest.
The good news is that the IRS recently announced a new program designed to make penalty relief easier for eligible taxpayers who have a history of responsible tax compliance.
IRS Creates Automatic Exemption From Penalty for Eligible Taxpayers
The IRS is introducing a new Automatic Exemption from Penalty (AEP) program.
This program replaces the long-standing First Time Abate administrative relief process and is designed to reduce the burden on taxpayers who have consistently met their tax obligations.
Under AEP, eligible taxpayers may automatically receive relief from certain penalties, including:
- Failure-to-file penalties
- Failure-to-pay penalties
- Failure-to-deposit penalties
Eligible taxpayers do not need to request this relief.
If the IRS applies AEP, the taxpayer will receive a notice confirming that penalty relief was granted.
Who Qualifies for Automatic Penalty Relief?
AEP is available to eligible taxpayers who have a history of filing returns and paying taxes on time.
Generally, taxpayers may qualify if they have:
- Filed required returns on time during the previous three years
- Paid taxes due during that period
- Maintained a consistent compliance history
For quarterly returns, eligibility may be based on having timely filed and paid for the previous 12 consecutive quarters.
The program applies to eligible original returns beginning with tax year 2025 and 2026 quarterly returns, as well as future tax periods.
Not every tax return qualifies.
Certain returns involving uncommon or special situations may not be eligible.
Self-Employed Workers Need to Stay Organized
For people earning income through self-employment, avoiding tax penalties starts with good habits.
The IRS generally requires self-employed individuals to make estimated tax payments quarterly.
These payments help cover:
- Income taxes
- Self-employment taxes
- Other tax obligations
Unlike traditional employees, self-employed workers do not have an employer automatically sending tax payments to the IRS.
That means it is your responsibility to:
- Track your income
- Keep accurate business records
- Estimate your tax obligations
- Make quarterly payments on time
The Best Way to Reduce Your Tax Burden Is to Avoid Unnecessary Costs
Everyone wants to reduce their tax burden, but many tax-saving strategies require spending money elsewhere.
For example:
- Contributing to a qualified retirement account may reduce taxable income, but the money generally cannot be used until retirement.
- Making charitable donations supports important causes but requires giving money away.
- Claiming business expenses can reduce taxable income, but those expenses often involve purchasing things needed for your work.
These strategies can be valuable, but they all involve using money in another way.
The simplest way to save money on taxes is often to avoid unnecessary penalties and interest by paying what you owe on time.
Good Tax Habits Protect You in the Future
Maintaining accurate records and paying estimated taxes on schedule may seem overwhelming, but it becomes easier with consistent habits.
Good tax practices include:
- Tracking income throughout the year
- Setting aside money for taxes
- Making quarterly estimated payments
- Keeping organized records
- Reviewing your tax situation regularly
These habits can help you avoid penalties, reduce stress during tax season, and protect you if unexpected challenges happen in the future.
Penny Forward Helps Build Financial Confidence
At Penny Forward, we believe financial independence starts with understanding how money works.
For people who are blind or have low vision, managing income, taxes, and self-employment responsibilities can be especially important when building a secure financial future.
Your support helps us continue providing financial education, resources, and community support.
Other IRS Penalty Relief Options
Taxpayers who do not qualify for Automatic Exemption from Penalty may still request penalty relief based on reasonable cause.
The IRS reviews these requests individually and will notify taxpayers of the outcome.
Even when penalty relief applies, taxpayers are still responsible for paying:
- Taxes owed
- Interest
- Any penalties that are not eligible for relief
For more information about IRS penalty relief, visit IRS.gov.
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