This text is posted with permission from our companion TaxAct. File your freelance taxes with confidence utilizing TaxAct’s easy-to-use tax software program. Freelancers Union members get 25% off the price of federal and state tax submitting: https://bit.ly/freelancers_taxact_blog
Should you’re even a reasonably profitable freelancer, you possible know should file a tax return and pay taxes in your earnings. However which tax varieties do you could file your self-employment taxes?
At a look:
- Along with the standard Type 1040, if you’re self-employed, you’ll possible want to connect sure schedules, like Schedule C or Schedule SE.
- Use any 1099-NEC varieties you obtain to precisely report your self-employment earnings.
- Type 8829 may also help you work the house workplace deduction, if relevant.
Listed below are 5 Inside Income Service (IRS) self-employed tax varieties and knowledge that could be related to your tax scenario.
1. Type 1040, U.S. Particular person Tax Return
Most U.S. tax filers use Type 1040 even after they’re not self-employed. This type is comprised of various sections the place you possibly can report your earnings and declare tax deductions. Whether or not or not you owe taxes, you would possibly qualify for sure tax credit.
Sure kinds of earnings or deductions could require you to connect extra schedules. As an illustration, if you happen to select to itemize your deductions as a substitute of taking the usual deduction, you’ll want to incorporate Schedule A along with your Type 1040.
As a freelancer specifically, you would possibly want to connect different particular schedules to your Type 1040.
2. Schedule C to Type 1040, Revenue or Loss From Business (Sole Proprietorship)
Talking of schedules, one you’ll in all probability must develop into acquainted with as a self-employed taxpayer is Schedule C. If you’re a sole proprietor, that is a vital type for you. Since sole proprietors take all enterprise income as private earnings, you employ Schedule C to report all earnings and bills from your small business to find out your revenue or loss.
Schedule C consists of two sections:
- Revenue: Beginning with earnings, document all funds you obtained out of your shoppers. You may need completely different quantities of gross receipts or gross sales, gross revenue, and gross earnings.
- Bills: Schedule C organizes your expense quantities into quite a few line objects. For instance, auto, promoting, depreciation, and provide bills are all recorded in separate classes.
Though you don’t should fill out a separate IRS tax type for enterprise use of your automotive, it is sensible to know what you possibly can declare for Schedule C. You’ll be able to solely deduct all bills for working your automotive if you happen to use it completely for your small business. Should you drive for each enterprise and private use, you will need to hold cautious information of what number of miles you drive for every. You need to use the usual mileage price or the precise bills methodology to calculate your small business mileage deduction.
3. Type 1099-NEC, Nonemployee Compensation
After the tip of the yr, every of your shoppers ought to offer you a Type 1099-NEC, Nonemployee Compensation, for the overall they paid you that yr if it exceeded the baseline quantity that the IRS specifies ($600 in 2023).
Evaluate each Type 1099-NEC you obtain to your information to ensure the quantities are constant. Your shoppers file Type 1099-NEC with the IRS, so that you don’t need there to be a notable discrepancy if the consumer claims they paid you greater than they did.
4. Type 8829, Bills for Business Use of Your House
You would possibly have the ability to declare sure bills for enterprise use of your property by taking the house workplace tax deduction. So as to take action, your property workplace should meet the next standards:
- It should be your principal administrative center or a administrative center the place you meet with sufferers, shoppers, or prospects.
- This space of your property should be used completely for enterprise functions.
Should you decide a part of your property is commonly used as your principal administrative center, you possibly can calculate the precise bills of your property workplace utilizing Type 8829. Deductible bills would possibly embrace mortgage curiosity, insurance coverage, utilities, and repairs. You received’t have the ability to deduct the complete value of those bills, however you possibly can deduct the share of your property that’s devoted to your property workplace. As an illustration, if you happen to use 15% of your property completely for enterprise, it is possible for you to to deduct 15% of your property bills as a part of this enterprise deduction.
Nevertheless, if crunching these precise percentages seems like a problem, a faster solution to calculate your bills is to make use of the simplified methodology, the place you merely deduct a flat price per sq. foot. The qualification necessities are the identical, however the means of determining the deduction and your recordkeeping obligations could also be extra simple.
Happily, TaxAct® makes it straightforward by doing these calculations for you — all it’s important to do is reply a number of interview questions.
5. Schedule SE (Type 1040), Self-Employment Tax
Most often, self-employed individuals who earned a minimum of $400 in web self-employment earnings (in 2023) should pay self-employment tax (SE tax). You are able to do this by submitting Schedule SE along with your Type 1040. The SE tax is 15.3% of your web earnings, and it covers your Social Safety and Medicare taxes. Fortunately, you possibly can declare 50% of self-employment taxes owed as a tax deduction. Schedule SE will assist you determine this deduction and direct you to enter it in your Type 1040.
The underside line
At all times examine that you just’ve obtained the proper variations of all IRS tax varieties for the yr and observe all instructions fastidiously. The varieties would possibly change, so that you don’t need to use a chunk of outdated info.
Utilizing a tax software program program, like TaxAct, helps make sure you’re utilizing the proper paperwork for the present tax yr. Merely reply a number of questions on your particular tax scenario and our program generates the suitable tax varieties for you.