Whether you’re a stay-at-home parent working a few hours per week or a full-time employee with a side job, freelancing can fit into many lifestyles. Flexible schedule, extra money, and often no commute – these are just a few perks. 

According to Forbes, freelance careers with the most openings and best paychecks include marketing, project management, web development, social media management or graphic design. There are more and more unique freelance opportunities nowadays too – travel writer, food blogger, YouTube star, Etsy shop owner or Uber driver. 

No matter your job, tax time can have a huge impact on your freelance success. Working for yourself can be rewarding, but also complicated if you don’t know how to properly file your income taxes. We’re here to make sure you’re ready this year.


Am I a Freelancer?

You’re considered self-employed if:

  • You own your own business or are an independent contractor.
  • You carry on a trade or business as part of a partnership.
  • You’re not an employee but you receive payments for your product or service.


What Should I Know?

  • Subtract your freelance expenses from your income. If that equals more than $400, then you need to file taxes.
  • You’ll likely have to pay income tax AND self-employment tax. (Self-employment tax is similar to Social Security and Medicare taxes withheld from an employee’s checks.)
  • Since you don’t have an employer withholding this tax, it’s probably a good idea to set up quarterly payments with Form 1040-ES. These payments can take the sting out of your year-end tax bill.


How Do I File?

  • Collect Form-1099 from each client that pays you $600 or more. (Keep these separate from your W-2 if you’re employed outside of freelancing.)
  • If you make less than $600 from a client, they are not required to issue you a form, however you’re still responsible for reporting all taxable income.
  • Gather receipts and records of business expenses, like home office or supplies, to claim as deductions.
  • Fill out a Schedule C or Schedule C-EZ to report your income or loss.


Do you have any tips for fellow freelancers? Share them in the comments below. DIY Tax is your tax solution no matter what your profession. Don’t forget to follow us on Facebook and Twitter!