Taxes for Freelancers: What the Self-Employed Need to Know

Working for yourself feels exhilarating. You’re your own boss. You can work wherever (and whenever) you want. The downside to your independence? Self-employed, freelance tax rules. Unlike employees who earn a paycheck, freelancers must calculate and pay quarterly taxes, among other responsibilities.

The income tax filing process differs for self-employed individuals compared to traditional employees. Freelancers must follow complicated rules and often file additional forms.This article explains what you should know about preparing and filing your freelance taxes.

Freelancer Tax Key Takeaways:

• Learn about the tax thresholds for filing income tax as a freelancer

• Identify additional taxes freelancers and independent contractors must file

• When freelance taxes are due 

Learn about Freelance Tax Laws

Freelancers and independent contractors should have a solid grasp of the tax rules and laws that impact them. We’ll cover some basics in this article.

You can find numerous resources at the Internal Revenue Service (IRS) small business and self-employed tax center, which provides information for all business types.

The 1-800Accountant blog supports small business owners by explaining complicated tax topics, including numerous articles for self-employed and freelance entrepreneurs.

Understand Your Business Structure

Tax forms you'll need and rates depend on your business entity type. When you operate as a freelancer, your business defaults to a sole proprietorship unless you establish a legal entity for your freelance work.

Other common legal entity types include the following:

• Limited Liability Company (LLC):

  • Single-member LLCs owned by individuals default to sole proprietorships. 

  • LLCs can elect to be treated as partnerships or C corps for income tax purposes.

• C corporation

• S corporation

• Partnership

Selecting the optimal business structure will impact your tax liability. Each business structure should follow relevant tax rules. We recommend consulting tax professionals to determine the right entity type for your freelance business.

Gather Your Business Information and Documents

You will receive income from multiple sources due to your freelance and independent contract work – bank account transfer, electronic payment, or paper checks – all requiring diligent tracking.US businesses must submit IRS Form 1099-NEC to report payments of $600 or more to freelancers and independent contractors. (Before 2020, the IRS required 1099-MISC for independent contractor payments.) You should receive a Form 1099-NEC from US corporations and partnerships no later than January 31 of the following year.

However, businesses that paid you less than $600, private individuals, and non-US businesses might not send you documentation. You should keep track of all payment sources and methods during the year, regardless of source.

To determine your business income and expenses, gather the following records: 

• IRS Forms 1099-NEC

• Bank statements and savings account records

• Online payment accounts, such as PayPal

Keeping accurate and current freelance income records while tracking other important metrics can be challenging and time-consuming. Save time using full-service outsourced bookkeeping from 1-800Accountant to maintain your freelance business records.

How Do You Report Freelance Income? Find Your Tax Forms

IRS Form 1040 Schedule C

Sole proprietors and single-member LLCs should report their business income and tax deductions on IRS Form 1040 Schedule C, Profit or Loss from Business. 

Review the Schedule C instructions to prepare the form. Enter your business information, then report your earnings and expenses on the relevant lines. Total your income and subtract deductions to compute your net profit or loss from your freelance business.

Report the total profit or loss on your Form 1040. If your net profit is at least $400, you should also complete Schedule SE.

IRS Form 1040 Schedule SE

Form 1040 Schedule SE, Self-Employment Tax, calculates the tax you owe on your self-employment income.

Freelancers with at least $400 net profit on Schedule C should complete Schedule SE. Report your self-employment tax on Form 1040.

IRS Forms 1120, 1120-S, and 1065

Corporate and partnership freelance businesses should report their income on business tax returns instead of Form 1040 Schedule C.

We recommend partnering with self-employment tax professionals to calculate and file your freelance business taxes.

When Do Freelancers Pay Taxes? Deadlines for Returns and Quarterly Estimates

Refer to the following due dates and note the filing deadlines for returns and estimates. Block some time on your calendar to gather information and file timely.2025 tax return filing deadlines:

• March 17: Form 1120-S and Form 1065 

• April 15: Form 1040 and Form 1120 

Do you need more time to file your return? You can submit a six-month extension. Be sure to pay what you think you’ll owe, or you could face penalties for failure to pay by the deadline.If you follow a fiscal tax year, different dates may apply. Check with a tax professional to find the right due dates for your business.

The IRS also expects businesses to pay estimated taxes as they earn income. Since full-time freelancers and independent contractors do not receive paychecks (and do not have taxes withheld each pay cycle), they should make quarterly tax payments. 

The IRS imposes penalties and interest for failure to pay your taxes on time. We recommend monitoring your receipts and expenses throughout the year to avoid surprises.

Quarterly payments are due by the 15th day of 

• April

• June

• September

• January 

How Much Do Freelancers Pay in Taxes? Calculate Your Taxes

Freelancers and independent contractors must pay both income tax and self-employment tax. 

The IRS updates individual income tax brackets annually. Refer to the following table for 2025 income tax rates.

Remember, many states and cities impose income taxes. Check your local tax rules to stay compliant.

What is self-employment tax?

In addition to income tax, freelancers pay self-employment tax of 15.3% (regardless of their income tax bracket). Self-employment tax represents 12.4% of Social Security and 2.9% of Medicare taxes.

Why do freelancers pay self-employment tax?

Consider a traditional employee who receives a bi-weekly paycheck: The employer withholds Social Security (6.2%) and Medicare (1.45%) taxes from the employee each pay cycle. The employer pays an equal portion. The employee and employer split the 15.3% of Social Security and Medicare taxes on the employee’s wages.

In contrast, self-employed individuals must pay both the employer’s and the employee’s share of Medicare and Social Security taxes. Fortunately, freelancers can take business expense deductions, which helps reduce taxable self-employment income.

Claim your freelancer tax deductions

Think through your business-related spending. Many of your freelance business expenses qualify as tax deductions, which reduce your taxable income and overall tax bill.

How do you know if you can deduct an expense? Qualified business tax deductions are ordinary (i.e., not excessive) and necessary for running the business. You must retain supporting documentation associated with each deduction you intend to claim.

Common business tax deductions include the following:

• Advertising

• Business equipment and supplies

• Depreciation

• Home office deduction

• Legal fees

• Training and education

• Travel and business meals

Track your spending throughout the year by monitoring your bank statements and credit card bills. Keep your financial materials organized and up to date with full-service bookkeeping from 1-800Accountant. 

Understand State and Local Tax Rules

Several factors, including the business structure you select to be taxed as, will dictate whether you'll be responsible for paying state and local business taxes. Review the following information to determine whether state and local taxes apply to your freelance taxes. If you still have questions, consult with a CPA for paying taxes to state and local authorities on your net earnings or annual income, among other helpful taxpayer insights to maximize your tax refund.

State income taxes

Whether your business is taxed as a corporation, LLC, or sole proprietorship, you may have to pay state taxes depending on the region. Employment and income taxes are at least two common state and local taxes that business owners must typically pay. Employment taxes include temporary disability insurance, unemployment insurance taxes, and workers' compensation insurance.

Property taxes

If you own your offices or the property on which you conduct business, you must pay property taxes to local tax officials. In some cases, only the real estate in which your business operates is taxed. In other cases, the real estate and property used by your business are taxed.

This is usually in the city or county where you conduct business. The tax itself is based on assessed value. You will receive information about the assessed value of your property annually. If you disagree with the assessed value, many localities will allow you to submit an appeal.  

Sales tax

Typically, small business owners must pay and report state sales taxes to businesses they work with that operate in states with state income taxes.

In most states, business owners collect sales tax and pay it to the state Department of Revenue. Online business owners may also be responsible for paying sales tax for certain types of sellers.

File Your Freelancer Taxes

LLCs featuring pass-through taxation have no separate federal tax process, so the IRS does not recognize them as a business category that must file taxes. This means every freelance LLC can effectively choose which approach to follow for its federal income tax. LLCs can use IRS Form 8832 to elect to classify themselves as sole proprietorships, partnerships, S corporations, or C corporations (this entity lacks pass-through taxation and is taxed twice). Regardless of entity type, you can submit your tax forms electronically and file your annual tax return via IRS Free File or traditional mail.

Simplify Your Freelance Tax Preparation

Taxes are complex. We understand self-employment taxes can feel like the least of your concerns when you have a business to run.1-800Accountant’s accounting and tax professionals can support all your self-employment and income tax needs. We’ll help you monitor your income and maximize your deductions.

Don’t risk forgetting to file. Schedule a free call for personalized assistance with tax preparation for freelancers & self-employed entrepreneurs.