Schedule C, self-employment tax, estimated payments, the home office, health insurance, retirement plans, the QBI deduction, and when a freelancer should elect S corporation status.
14 guides, each written by a CPA licensed in the US and Canada.
Clients must issue a 1099-NEC by January 31 when they pay a freelancer $600 or more ($2,000 for 2026 payments), but all freelance income is taxable either way.
US TaxThe IRS uses a nine-factor test to determine whether a freelance activity is a business (deductible losses) or a hobby (losses not deductible).
US TaxCosts you pay before your business opens are startup costs, deducted on a schedule once it begins. If it never opens, IRS guidance splits them into nondeductible and capital loss.
US TaxFreelancers must make quarterly estimated tax payments to cover income tax and self-employment tax. Quarterly estimated tax payments are due April 15.
US TaxFreelancers and independent contractors report income and expenses on Schedule C, pay 15.3% self-employment tax on top of income tax.
US TaxUS freelancers who earn income from foreign clients must report all worldwide income. US citizens and residents are taxed on worldwide income.
US TaxFreelancers who work from a dedicated home space can deduct housing costs using the simplified ($5/sq ft) or actual expense method.
US TaxThe QBI deduction equals 20% of qualified business income (net profit from Schedule C, or K-1 income from an S-Corp/partnership).
US TaxFreelancers have access to the same retirement plan options as any self-employed business owner. The two primary plan types for freelancers are the SEP.
US TaxThe S-Corp election (Form 2553) must be filed by March 15 of the year it takes effect, or within 75 days of forming a new entity.
US TaxFreelancers can deduct 100% of health insurance premiums as an above-the-line adjustment, reducing income tax and AGI. The self-employed health insurance.
US TaxSelf-employed business owners can deduct health, dental, and vision insurance premiums for themselves and their family. Includes IRS rules, documentation.
US TaxThe self-employment tax calculation starts with net profit from Schedule C (or the partner's share of partnership income).
US TaxFreelancers earning above $80,000-$100,000 in net profit can save $5,000-$20,000 per year in self-employment tax by electing S-Corp status.