Discover published sets by community

Freelancers must pay estimated taxes quarterly to avoid underpayment penalties. Calculate your estimated tax based on the income you expect to earn and use Form 1040-ES to submit payments.

This tax covers Social Security and Medicare. Calculate it using Schedule SE, which is filed with your annual tax return, and is based on your net earnings from self-employment, typically at a rate of 15.3%.

Freelancers can deduct expenses that are both ordinary and necessary for their business; keep records and receipts. This includes office supplies, advertising, travel, and business use of your home.

To qualify, you must use part of your home regularly and exclusively for business. Use the Simplified Option or regular method to calculate the deduction based on square footage.

Freelancers can deduct premiums paid for medical, dental, and qualified long-term care insurance for themselves, their spouse, and dependents.

Freelancers can contribute to retirement plans such as an SEP-IRA or a Solo 401(k). Contributions reduce taxable income and hence the tax burden.

Freelancers receive Form 1099-NEC from clients who paid them $600 or more during the tax year. Report this income on Schedule C when filing taxes.$

Depending on your business and location, you may need to collect and remit sales tax. Register with your state, collect the tax, and pay it to the appropriate tax authority.

Freelancers living abroad can exclude a portion of their foreign earnings from U.S. taxes, using the Foreign Earned Income Exclusion, provided they meet certain criteria.

Use the standard mileage rate or actual expenses to deduct the use of your vehicle for business. Keep a detailed log of mileage and expenses if required.

Maintain organized records of all business-related transactions, including income and expenses. Good record-keeping simplifies tax preparation and supports deductions in case of an audit.

Freelancers can face an underpayment penalty if they do not pay enough tax through withholdings and estimated tax payments. Use Form 2210 to determine if you owe a penalty and to calculate the amount.

Various tax credits may be available, such as the Earned Income Tax Credit, education credits, or the home office energy efficiency credit. Credits can directly reduce the amount of tax you owe.

Keep clear and detailed records, report all income accurately, reason your deductions and keep evidence, and consider professional tax preparation to minimize the risk of an audit.