Upwork Taxes: How to File Your 1099 for Upwork Income

If you earn freelance income through Upwork, you’re considered self-employed for tax purposes, even if you see your work as a side hustle. Many freelancers don’t realize that every dollar earned on Upwork must be reported to the IRS. Whether you receive a tax form from Upwork or not, you’re still responsible for reporting your income accurately and paying any self-employment taxes owed. 

This guide breaks down everything you need to know about Upwork taxes, including which 1099 form you might receive, how to track your income, and how to file your taxes correctly.

Key Highlights

• Upwork income is considered self-employment income and must be reported to the IRS.

• You may receive IRS Form 1099-K from Upwork if your 2025 earnings exceed $20,000 and 200 or more transactions.

• Even if you don’t get a 1099, you’re still required to report all income earned.

• Freelancers should set aside 15% to 20% of their annual earnings for taxes.

• Tracking income and expenses is crucial for maximizing deductions and minimizing tax liability.

• Using a professional accounting service, like what 1-800Accountant offers for a tax-deductible fee, can help ensure accuracy and maximize your savings.

Why Upwork Income Is Taxable (and What That Means)

Freelancers working through Upwork are classified as independent contractors, not employees. That means you’re responsible for reporting your income and paying self-employment tax. The IRS views your Upwork earnings as business income, just like any other self-employed person.

According to Upwork’s Help Center, all U.S. freelancers must report their total earnings from the platform, even if they don’t receive a tax form. For 2025, Upwork issues Form 1099-K to freelancers who earn $20,000 or more in gross payments and 200 or more transactions. Expect the same Upwork 1099-K threshold for the 2026 tax year. 

This distinction matters because no taxes are automatically withheld from your Upwork payments. You must calculate, report, and pay taxes yourself. Skipping this step can lead to:

• IRS penalties

• Back taxes

• Audits

Freelancing has become a significant force in the economy. In fact, nearly 40% of Americans performed freelance work in 2022, representing $1.3 trillion of the U.S. economy. As this trend continues to grow, understanding how to report freelance income accurately is more important than ever.

What Tax Forms Upwork Freelancers Receive

Form 1099-K via Upwork

A 1099-K reports payments received through third-party networks, such as Upwork. For 2025, Upwork issues a 1099-K to freelancers who earn $20,000 or more with 200 or more transactions. The form shows your total gross payments, meaning it doesn’t subtract Upwork’s service fees, refunds, or expenses.

Even if you don’t receive this form, you’re still required to report all earnings to the IRS. Upwork provides access to your full payment history in your account dashboard, allowing you to generate your own records.

Other 1099 Forms (NEC or MISC)

Upwork does not issue IRS Form 1099-NEC, Nonemployee Compensation, or IRS Form 1099-MISC, Miscellaneous Information, to U.S. freelancers. However, if you run an agency or pay subcontractors through your business, you may need to issue those forms to others. This typically applies if you operate through an LLC or pay team members.

When Upwork Acts as an Employer (W-2)

In rare cases, freelancers working through Upwork Payroll may be classified as employees and receive a W-2 form. This only applies if Upwork manages your payroll and withholds taxes on your behalf.

Tracking Your Income and Expenses from Upwork

Gathering Your Income Records

Log in to your Upwork account and download your Transaction History report to view total billings and fees. The IRS expects you to report your gross income, even if Upwork didn’t issue a 1099-K. Make sure to keep a record of every payout, even if it’s from multiple clients.

Tracking Business Expenses and Deductions

As a freelancer, you can deduct any ordinary and necessary business expenses. Personal expenses are not deductible. Common examples of Upwork tax deductions for freelancers include:

• Upwork service fees

• Computer and software expenses

• Internet and phone bills

• Home office portion of rent or mortgage

• Professional services, such as virtual tax preparation

Keeping detailed records of these expenses can significantly reduce your taxable income. Tools like spreadsheets or accounting software can help you organize receipts and payments.

When Quarterly Estimated Tax Payments Apply

Self-employed individuals are required to make quarterly estimated tax payments to the IRS. These payments typically fall in April, June, September, and January. Freelancers should save 15% to 20% of their income to cover these payments.

Missing quarterly payments can result in interest and penalties, so it’s wise to plan throughout the year.

How to File Your Taxes With Upwork Income

Follow this step-by-step Upwork freelancer tax guide to learn how to file 1099 for Upwork income. 

Step-by-Step Filing Process

1. Gather your 1099-K and all income records. Include any additional freelance earnings you received outside of Upwork.

2. Calculate your business expenses and subtract them from your total income to find your net profit.

3. Complete Schedule C (Profit or Loss from Business) if you’re a sole proprietor.

4. Calculate Upwork self-employment tax using Schedule SE (usually 15.3% of your net profit).

5. Transfer totals to IRS Form 1040, U.S. Individual Income Tax Return, to complete your return.

Filing Software vs. Hiring a Professional

You can file your taxes using DIY software, but working with a professional ensures accuracy and maximized deductions. Services like 1-800Accountant’s income tax preparation give you access to CPAs, EAs, and other tax professionals who understand freelancer tax laws and can help reduce your liability and free up your time. 

Common Mistakes to Avoid

Avoid these common mistakes that freelancers often make when reporting their income. 

• Not reporting income because you didn’t receive a 1099.

• Forgetting to pay self-employment tax.

• Mixing business and personal expenses.

• Missing quarterly tax payments.

• Assuming Upwork withholds taxes for you.

Tips to Minimize Your Tax Liability (While Staying Compliant)

Use these tips for ideas on how you can reduce your tax liability while maintaining compliance with the IRS. 

• Track every business expense and store receipts.

• Deduct health insurance premiums and retirement contributions if eligible.

• Use the home office deduction if you work from home.

• Consider forming an LLC or an S corp to potentially reduce taxes.

• Adjust your quarterly tax payments based on income fluctuations.

• Schedule year-end tax planning with a professional at 1-800Accountant to optimize deductions.

When to Get Help From a Professional

If your Upwork income is significant, you work on multiple platforms, or you have complex expenses, hiring a professional accountant can save you time and stress. The experts at 1-800Accountant, America's leading virtual accounting firm, can handle bookkeeping, estimated taxes, year-end filing, and audit protection. Don’t wait until April — get support early to plan ahead and avoid surprises.

Learn more about taxes for freelancers and how professional guidance can simplify the process.

FAQs

Do I have to pay taxes if I earned less than $20,000 on Upwork?

Yes, the IRS expects you to report all eligible income. Even if you don’t receive a 1099-K, all income must be reported.

What if I earn small amounts on multiple platforms – do I still have to pay self-employment tax?

You must pay self-employment tax if your combined net profit exceeds $400. This can be $400 or more from Upwork, or a combination of income sources. 

Can I deduct Upwork fees?

Yes, Upwork fees are considered an ordinary and necessary business expense and can be deducted. Disclose this expense on Schedule C.

What if I worked for Upwork, but I’m not a U.S. citizen?

If you're not a US citizen, you may need to complete a W-8BEN or W-8BEN-E form instead of an Upwork 1099. Contact Upwork for guidance. 

Will Upwork withhold any taxes for me?

No, Upwork does not withhold taxes on your behalf. Freelancers are responsible for paying their own income and self-employment taxes.

Conclusion

Your Upwork earnings are taxable, regardless of whether you receive a 1099 form. By tracking your income, saving for quarterly taxes, and claiming all eligible deductions, you can stay compliant and reduce what you owe. Filing correctly also helps you avoid costly IRS penalties.

If you’d like professional support handling your Upwork taxes, 1-800Accountant can help. Our experienced team understands freelance income, self-employment tax, and deduction strategies designed to keep more money in your pocket. Schedule a free consultation today and let us simplify your tax season so you can focus on doing what you do best: growing your freelance business.