{"id":26866,"date":"2026-04-23T18:06:27","date_gmt":"2026-04-23T18:06:27","guid":{"rendered":"https:\/\/didebta.com\/?p=26866"},"modified":"2026-04-23T18:06:27","modified_gmt":"2026-04-23T18:06:27","slug":"what-are-freelance-taxes-and-how-do-they-work","status":"publish","type":"post","link":"https:\/\/didebta.com\/?p=26866","title":{"rendered":"What Are Freelance Taxes? And How Do They Work?"},"content":{"rendered":"
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Being a freelancer means being your own boss, which can feel pretty stinkin\u2019 awesome. And you\u2019re not alone. In fact, a recent study found that in 2023 about 64 million Americans did some form of freelance work\u2014making up 38% of the labor force and contributing $1.2 trillion to the U.S. economy.4<\/sup>\n <\/p>\n

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Get expert money advice to reach your money goals faster!<\/p>\n<\/p><\/div>\n

And freelancing comes with some sweet perks. You get to choose your hours, what projects to take on, and where you work. Basically, you get to be your own CEO! But that\u2019s also where the downside of being your own boss comes in. Yup, we\u2019re talking about taxes.\n <\/p>\n

Whether you\u2019re a full-time freelancer or you just make a few hundred bucks here and there with a small side hustle, it\u00a0will\u00a0<\/em>impact how you file your taxes. And if you\u2019re not careful, you could lose a large chunk of your freelance income to an enormous tax bill. Let\u2019s run through some important basics that freelancers need to know about their taxes.\n <\/p>\n

What Taxes Do I Owe on My Freelance Income?<\/h2>\n

In most cases, freelancers are on the hook for two types of taxes: income taxes and the self-employment tax. Here\u2019s how it shakes down\u2014if you earn $400 or more from freelance work in any given year, you\u2019re responsible for paying the self-employment tax on those earnings.5<\/sup>\n <\/p>\n

But keep this in mind: You need to report all income<\/em> on your tax return\u2014yes, even freelance income under $400. Why? Because even if you\u2019re not getting hit with the self-employment tax, that money is still taxed as part of your income.\n <\/p>\n

How Much Should I Set Aside for Freelance Taxes?<\/h2>\n

We recommend setting aside about 25\u201330% of your freelance income in a separate savings account to cover both income taxes and self-employment tax. Your future self will thank you.\n <\/p>\n

No, really, you don\u2019t want to get blindsided by a huge tax bill once tax season rolls around. Searching between the sofa cushions for cash to pay Uncle Sam the night before Tax Day isn\u2019t fun. Trust us on that one.\n <\/p>\n

What Is the Self-Employment Tax?<\/strong><\/h2>\n

The\u00a0self-employment tax\u00a0is a 15.3%\u00a0tax on your freelance income, and it solely exists to cover your Social Security and Medicare taxes.6<\/sup>\n <\/p>\n

At a normal full-time job, your Social Security and Medicare taxes are taken out of your paychecks automatically\u2014and your employer covers half of those taxes.\u00a0But as a freelancer, you\u2019re considered both an employee\u00a0and<\/em>\u00a0an employer.<\/strong> That\u2019s why the IRS wants you to cover the whole 15.3%.\n <\/p>\n

The Schedule SE tax form\u00a0helps you calculate your self-employment tax, which you\u2019ll then report on your standard Form 1040.7<\/sup>\u00a0And remember, the self-employment tax is\u00a0in addition<\/em>\u00a0to your regular income taxes.\n <\/p>\n

Okay, that might sound like a lot to shell out, but don\u2019t freak out just yet. The IRS actually lets you deduct half the self-employment tax (the half your employer would\u2019ve paid) from your income on Form 1040.8<\/sup> So while you still should make the quarterly payments in full (more on that in a minute), you\u2019ll at least get some relief when it comes to your income taxes.\n <\/p>\n

How Do I Find Out if I Need to Pay Quarterly Taxes?<\/h2>\n

That\u2019s a great question!\u00a0According to the IRS, you should pay\u00a0estimated taxes\u00a0quarterly\u00a0if you expect to owe at least $1,000 in taxes on the income you make from freelance work this year.9<\/sup>\n <\/p>\n

Why Do I Need to Pay Quarterly Taxes?<\/h2>\n

The U.S. is a pay-as-you-go tax system. If you have a normal 9-to-5 job with a salary, benefits and the whole nine yards, chances are your employer is withholding taxes from each paycheck and sending that money to Uncle Sam to cover your tax liability throughout the year. But that\u2019s usually not the case with your freelance income\u2014and that\u2019s where quarterly taxes come in.\n <\/p>\n

If you\u2019re only making a couple thousand dollars or less freelancing each year, you can probably skip quarterly tax payments and just report your freelance income when you file your tax return. But if you expect to owe $1,000 or more in taxes on your freelance income for the year, Form 1040-ES can help you estimate your income and ballpark your projected taxes.10<\/sup>\n <\/p>\n

When Do I Have to Pay Quarterly Taxes on My Freelance Income?<\/h2>\n

Like we said earlier, the federal government is impatient and doesn\u2019t want to wait until next April to collect your tax dollars. So if your freelance gigs are booming, you\u2019ll probably need to\u00a0pay the IRS on a quarterly basis.\u00a0\n <\/p>\n

Here are the quarterly estimated tax deadlines for the 2025 tax year:11<\/sup>\n <\/p>\n\n\n\n\n\n\n\n\n
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When You Get Paid<\/strong>\n <\/p>\n<\/td>\n

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Tax Due Date<\/strong>\n <\/p>\n<\/td>\n<\/tr>\n<\/thead>\n

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Jan. 1\u2013March 31\n <\/p>\n<\/td>\n

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April 15, 2025\n <\/p>\n<\/td>\n<\/tr>\n

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April 1\u2013May 31\n <\/p>\n<\/td>\n

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June 16, 2025\n <\/p>\n<\/td>\n<\/tr>\n

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June 1\u2013Aug. 31\n <\/p>\n<\/td>\n

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Sept. 15, 2025\n <\/p>\n<\/td>\n<\/tr>\n

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Sept. 1\u2013Dec. 31\n <\/p>\n<\/td>\n

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Jan. 15, 2026\n <\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

If you underpay your quarterly tax payments\u2014these are\u00a0estimates<\/em>, after all\u2014you\u2019ll have to pay the remaining taxes when you file your annual tax return.\u00a0(And yes, freelancers must file an annual tax return by April 15\u2014just like everyone else.)\u00a0On the other hand, if you overpay your quarterly taxes, you\u2019ll receive the excess amount back in the form of a tax refund.\u00a0\n <\/p>\n

What Other Tax Forms Do I Need to File My Taxes as a Freelancer?<\/h2>\n

As you can see, freelancing comes with a little extra paperwork at tax time. In addition to your typical tax forms, there are a few specific ones you might need to gather to report your income and expenses accurately. Here\u2019s a quick rundown:\n <\/p>\n

1099-NEC<\/h3>\n

As a freelancer, you should receive 1099-NEC forms (which stands for\u00a0nonemployee compensation<\/em>) from each\u00a0business<\/em>\u00a0client who paid you $600 or more.12<\/sup>\u00a0For example, if you\u2019re an event photographer who worked several corporate events for a specific company in your town, you can probably expect them to send you a 1099-NEC form.\n <\/p>\n

1099-K<\/h3>\n

What if your customers or clients use Venmo, PayPal or other online payment systems to pay for a product or service you offer? If that\u2019s the case, you might get 1099-K forms from those online payment systems instead.13<\/sup>\n <\/p>\n

Schedule C<\/h3>\n

If you don\u2019t receive a 1099-NEC or 1099-K from a client, that doesn\u2019t mean you\u2019re off the hook. You still need to report all self-employment income to the IRS using a Schedule C form.\n <\/p>\n

A\u00a0Schedule C tax form\u00a0serves as the hub for all your freelance income and expenses. First, you\u2019ll report\u00a0all<\/em>\u00a0the freelance income you earned during the tax year in Part I. This includes amounts already reported on the 1099 forms you received from clients\u00a0and<\/em>\u00a0amounts not yet reported from clients who didn\u2019t send a 1099. After that, you\u2019ll list your expenses in Parts II\u2013V to see if you can claim any deductions.\n <\/p>\n

Tax Deductions for Freelancers<\/strong><\/h2>\n

Tax deductions\u00a0lower your taxable income, potentially reducing your tax bill and saving you hundreds of dollars in the process. And as a freelancer, you get to claim a bunch of them! But many self-employed professionals don\u2019t take advantage of tax deductions they qualify for. That means some freelancers are paying more taxes than they have to. Yuck<\/em>!\n <\/p>\n

You already know you can deduct half the self-employment tax on your 1040 at tax time. You can also <\/em>claim deductions on expenses the IRS considers\u00a0\u201cordinary and necessary\u201d\u00a0for the operation of your\u00a0<\/strong>business.\n <\/p>\n

Some of the most common deductions for freelancers include:\n <\/p>\n