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The Definition of Freelancer Taxes -
Important Date and Forms
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What to know about tax forms and deadlines for self-employment taxes?
Every now and then you might have thought of quitting your job and starting some venture of your own. Well, working as a freelancer might just be the first step towards this aspiration. Freelancers are professionals that work for themselves and are not bound by the usual 9-to-5 schedule of a company.
Unlike full-time employees, freelancers have the liberty to choose their work, schedule and timelines. Freelancers are often high-skilled workers who leave the traditional 9-5 workforce to operate autonomously.
According to research by Statista, freelancers are one of the largest emerging groups of professionals in the U.S. As of 2024, there are more than 76.4 million freelancers, which is expected to increase to more than 90 million by 2027.
The freedom freelancers have comes with the additional baggage of taxes. Freelancer taxes are an essential part of a freelancer's life since they must pay federal and state taxes without the help of an employer. Plus, they're responsible for paying self-employment taxes.
Table of contents
Key Highlights:
- There are four quarterly tax payment deadlines for freelancers
- Self-employed taxes are different from regular income taxes
- There’s a long list of qualifying business-related deductions for freelancers
What are freelancer taxes?
The 1099 tax for freelancers are the quarterly taxes paid by a freelancer to the IRS.
All freelancers have regular income tax brackets like any other U.S.-citizen. The primary distinction is that a freelancer:
- Can have business deductions, which lowers their taxable income
- Has to pay taxes four times a year
- Has to keep track of all the business expenses for tax deductions
Speaking of SECA taxes, freelancers must pay 15.3% of their income for Social Security (12.4%) and Medicare (2.9%) taxes. It's just one of the side effects of freelancing; you'll have to take care of the full amount of Social Security and Medicare taxes. On the bright side, you can mention half of the SECA tax as a deductible.
When working as a full-time W-2 employee, the 50% of these taxes are directly withheld from your paycheck. The other half is paid by your employer in a full-time work setting.
With an income of $125,000, Juan will have to pay 15.3% of this income in SECA taxes.
Quick tip
Always set aside enough money to pay taxes on your income and SECA taxes.
How to do taxes as a freelancer?
This is where things get a bit more complicated. Freelancers usually have multiple clients, and each client pays you according to individual projects or tasks. This means that your income constantly fluctuates and might never be the same for two consecutive quarters.
You need to constantly track your income and expenses for every month, so that you can find business deductions to effectively lower your tax liability. Then you have to pay your quarterly taxes and file annual tax returns before the April 15 deadline every year.
What are tax forms for freelancers?
The IRS Form 1099 is an important form for freelancers or self-employed individuals. This form is an information-sharing document that your client or company will share with the IRS which reports any payments made to you for your services.
You’ll also receive a copy of this form if you earned more than $600 in non-employee income. So if you sold your motorbike for $900 on eBay, expect a 1099 form in February with that amount – simply because the IRS will treat it as a taxable income.
When you do your freelancer taxes, you'll have to accurately mention the information from the 1099 form with your regular Form 1040. Any discrepancies can attract IRS penalties.
Based on the nature of the payout, there are different types of 1099 forms.
- 1099-NEC: Form to report all non-employee compensation of $600 or more
- 1099-MISC: Form to report miscellaneous income, including rent, royalties and prizes.
- 1099-INT: Form to report income from interest including from a bank, stocks or loans.
- 1099-K: Form to report income from third-party payment apps like Venmo and PayPal.
How to pay taxes as a freelancer?
W-2 employees have their tax amounts directly withheld from their income while freelancers need to pay taxes on their own. Freelancers have to pay quarterly taxes before the tax payment deadlines.
When it comes time to pay your taxes, you'll have to calculate your quarterly income and then find your estimated taxes for the same quarter. You can also pay the amount you paid in the quarter of the last financial year if you’ve been freelancing for a few years.
You can also calculate and pay either 100% of your estimated freelancer taxes for this quarter or more than 90% of the estimated tax, with the help of an estimated tax .
You can use the IRS eFile to pay this amount, or you can send a check. The difference is that with mailing it takes more time since the check is sent using a postal service.
What are freelancer tax deductions?
Many business-related expenses are tax deductible which can lower your taxable income. For example, if you’re a freelancer marketing executive and use a portion of your home as your office, you can take the home office deduction and deduct a part of your house expenses from your taxable income.
These expenses include utilities and home maintenance costs based on a percentage of the area. You can also deduct other business related expenses including:
- Business meals
- Business travel
- Internet and phone bills
- Car usage
- Health insurance premiums
- Educational expenses
- Advertisement expenses
What’s FlyFin?
FlyFin caters to the tax needs of freelancers, gig workers, independent contractors and sole proprietors. But anyone can file taxes through FlyFin!
FlyFin tracks all your business expenses automatically using A.I. to find every possible tax deduction. Then, our CPA team files a guaranteed 100% accurate tax return for you – to save you a couple of thousand dollars and a ton of time on your taxes.
Download the FlyFin app and have your taxes filed in less than fifteen minutes, saving time and more money on your taxes than last year, guaranteed.
Expert tax CPAs ensure 100%-accurate tax filing
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On average users save $3,700
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