How to File Your Self-Employment Taxes

Are you a freelancer, gig worker, or independent contractor? If so, filing your self-employment taxes can feel like a daunting task. But fear not! We're here to help you navigate the process with ease.

Understanding and managing your self-employment taxes is crucial for maintaining a successful business and avoiding potential penalties from the IRS. In this blog post, we'll break down the steps you need to take to properly calculate, pay, and file your self-employment taxes.

By the end of this post, you'll have a clear understanding of how to tackle your self-employment taxes and feel confident in your ability to stay compliant with tax regulations. Let's get started!

What are the requirements for filing self-employment taxes?

Before diving into the process, it's important to know if you're required to file self-employment taxes. Generally, you'll need to pay self-employment tax if you're a sole proprietor, independent contractor, freelancer, small business owner, gig worker, or side hustler earning more than $400 in net income from your self-employed work.

Self-employment tax is comprised of Social Security and Medicare taxes, which are automatically withheld from W-2 employees' paychecks. As a self-employed individual, you're responsible for paying these taxes yourself, at a rate of 15.3% on top of your federal and state income taxes.

How do I calculate my self-employment taxes?

Calculating your self-employment taxes involves several steps.

1. Determine your net income

First, you'll need to figure out your net income from self-employment. This is your total income minus any allowable business expenses. Keep track of your income and expenses throughout the year to make this step easier.

2. Calculate your self-employment tax

Once you have your net income, you can calculate your self-employment tax. Multiply your net income by the self-employment tax rate (15.3%) to determine how much you owe. Don't forget that this amount is in addition to your federal and state income taxes.

3. Estimate your tax payments

If you expect to owe more than $1,000 in self-employment tax, you'll need to make estimated tax payments throughout the year. These payments are typically due quarterly and can be calculated using your net income and the self-employment tax rate. Use a tax calculator or consult a tax professional to help estimate your payments.

4. Gather necessary tax forms

When it's time to file your taxes, you'll need several forms, including Form 1040 (Individual Income Tax Return), Schedule C (Profit or Loss from Business), and Schedule SE (Self-Employment Tax). Be sure to fill out these forms accurately and completely to avoid any issues with the IRS.

5. File your taxes

Once you've calculated your self-employment tax and filled out the necessary forms, it's time to file your taxes. You can do this yourself, use tax software, or work with a tax professional. Be sure to double-check your work and submit your taxes by the deadline to avoid penalties.

What if I need help with my self-employment taxes?

If you're feeling overwhelmed by the process of filing your self-employment taxes, don't worry – you're not alone! Many self-employed individuals find it helpful to work with a tax professional or use tax software to ensure they're accurately calculating and paying their taxes.

Additionally, there are numerous resources available online to help you understand self-employment tax requirements and navigate the filing process. Don't be afraid to seek help if you're unsure about any aspect of your self-employment taxes.

How To File Taxes If You Missed The Deadline?

If you've missed the deadline for filing your self-employment taxes, don't panic. You can still file your taxes, but you may be subject to penalties and interest on any unpaid taxes. Here's what you need to do:

1. File your taxes as soon as possible

The sooner you file your taxes, the less you'll owe in penalties and interest. Gather all the necessary forms and information, and file your taxes as quickly as you can. If you're unsure about any part of the process, consider seeking help from a tax professional or using tax software.

2. Pay any outstanding taxes

If you owe taxes, it's important to pay them as soon as possible to minimize penalties and interest. You can make payments directly to the IRS through their online payment portal. If you're unable to pay the full amount, consider applying for an installment agreement or an offer in compromise to set up a payment plan with the IRS.

3. Learn from the experience

Missing the tax deadline can be a stressful experience, but it's also an opportunity to learn and improve your tax management skills. Make a plan to stay organized and on top of your self-employment taxes in the future. This may include setting reminders for quarterly tax payments, using tax software, or working with a tax professional.

Which Tax Forms Does A Freelancer Need?

As a freelancer, you're responsible for managing your own taxes, which can sometimes feel overwhelming. However, understanding the various tax forms you need to file is crucial for staying compliant with the IRS and avoiding potential penalties. In this section, we'll discuss the most common tax forms that freelancers need to be aware of and provide a brief explanation of each.

1. Form 1040 (Individual Income Tax Return)

Form 1040 is the standard tax form used by individual taxpayers in the United States to report their annual income. As a freelancer, you'll need to file this form to report your self-employment income, as well as any other sources of income you may have. The form includes sections for reporting your income, deductions, and credits, and calculating your tax liability.

2. Schedule C (Profit or Loss from Business)

Schedule C is a supplemental form that freelancers and other self-employed individuals must attach to their Form 1040. This form is used to report your business income and expenses, as well as calculate your net profit or loss. Your net profit or loss is then transferred to your Form 1040, where it is included in your overall taxable income. Be sure to keep accurate records of your business income and expenses throughout the year to make filling out Schedule C easier.

3. Schedule SE (Self-Employment Tax)

Schedule SE is another supplemental form that freelancers need to attach to their Form 1040. This form is used to calculate your self-employment tax, which consists of Social Security and Medicare taxes. As a self-employed individual, you're responsible for paying both the employer and employee portions of these taxes, which is why the self-employment tax rate is 15.3%. Schedule SE helps you determine how much you owe in self-employment taxes based on your net profit from Schedule C.

4. Form 1099-NEC (Nonemployee Compensation)

Form 1099-NEC is a tax form that businesses use to report payments made to non-employees, such as freelancers and independent contractors. If you earned more than $600 from a single client during the tax year, you should receive a 1099-NEC from them by January 31st. This form serves as a record of your income from that client and should be used when preparing your tax return. Be sure to keep track of all 1099-NEC forms you receive and report the income on your Schedule C.

5. Form 4868 (Application for Automatic Extension of Time to File)

If you need more time to prepare your tax return, you can file Form 4868 to request an automatic six-month extension. This extension gives you until October 15th to file your tax return, but it does not extend the time to pay any taxes you owe. It's important to estimate your tax liability and pay any outstanding balance by the original due date (usually April 15th) to avoid penalties and interest.

6. Form 8829 (Expenses for Business Use of Your Home)

If you use part of your home exclusively for business purposes, you may be eligible to claim the home office deduction. Form 8829 is used to calculate the allowable expenses for the business use of your home, such as mortgage interest, property taxes, utilities, and depreciation. These expenses are then reported on your Schedule C, reducing your taxable income. Note that there is also a simplified method for claiming the home office deduction, which does not require Form 8829.

7. Form 4562 (Depreciation and Amortization)

If you have business assets that depreciate over time, such as a computer or vehicle, you'll need to file Form 4562 to report the depreciation expenses. This form helps you calculate the allowable depreciation for each asset based on its cost, useful life, and depreciation method. The total depreciation expenses are then reported on your Schedule C, reducing your taxable income. Be sure to keep accurate records of your business assets and their costs to make filling out Form 4562 easier.

What is Workmade?

WorkMade is an all-in-one banking and accounting app designed specifically for freelancers! WorkMade gives you access to: zero-fee business banking, automated bookkeeping, fast and easy invoicing, and quarterly tax estimations and payments.

About Workmade
An artistic photograph of a freelancer getting paid

The banking app that pays your taxes, finds write-offs and gets you paid fast.

Free to download. Sign up in 60 seconds.

Learn More

Do your thing.

It only takes 60s to

Get Started

Scan to download the app.