Today, we’re going to walk you through how to prepare for filing taxes as a freelancer.
We’ll tell you the forms you need, how to maximize your tax write-offs, if you owe quarterly taxes, and if your tips are taxable income.
Our goal is to make your tax prep easy and straightforward, and walk you through the prep process step-by-step—let’s dive in!
Step 1: Collect and fill out relevant tax forms
There are various forms you’ll need to file your taxes. Let’s get organized!
To file taxes, you’ll need to fill out the following forms:
- Form 1040, U.S. Individual Income Tax Return or Form 1040-SR, U.S. Tax Return for Seniors
- Schedule SE (Form 1040), Self-Employment Tax
- Schedule C (Form 1040), Profit or Loss from Business (Sole Proprietorship)
You’ll report income through the standard tax return, Form 1040. You’ll use Schedule C to list your income and expenses (and expenses = write-offs!). Plus, there may be additional state and local tax forms you’ll need as well—check with your tax service or professional.
Forms from clients
You may receive income information from your clients. This may come in the form of a 1099. Even if you do not receive a 1099, you are still required to report your income to the IRS even if you don’t receive a 1099.
Step 2: Calculate your write-offs/tax deductions
You can write-off miles you drove for work. However, it’s crucial to keep careful and detailed records of your mileage ( a mileage tracker like Everlance makes this easy and automatic!).
There are two ways to calculate your mileage deduction:
- Actual Expense Method: you calculate and deduct the actual expenses of operating your car. These expenses include gas, oil, insurance, registration, repais, lease payments, or maintenance. For more information on the Actual Expense Method, visit the IRS’s guide.
- Standard IRS Mileage Deduction: This is the easiest method and can result in a higher deduction. To use this method, multiply your total business miles by the IRS Standard Mileage Rate for business. In 2021, this would look like: 10,000 work miles x $0.56 mileage rate = $5,600 deduction.
Do you use the same car for work and personal transportation? If so, then you’re required to keep detailed and accurate records that separate these uses. If you don’t have mileage logs, receipts, or other documentation, the IRS may disallow any business expenses you list. That’s why a mileage tracker is so important (Everlance is the #1 mileage and expense tracker, and it makes mileage logs easy and automatic!).
You may be able to write-off work expenses. It’s crucial to keep careful and detailed records of your expenses (an expense tracker like Everlance makes this easy and automatic!).
Remember, Everlance doesn’t offer tax advice. Please refer to your tax professional or service for more information about your specific deductions.
Do you owe quarterly taxes?
Since you’re a freelancer, you might be responsible for estimated quarterly taxes—especially if freelancing is your sole source of income.
Make sure to pay estimated taxes on time. Each quarter, you're expected to pay taxes for that quarter's payment period. Here are the due dates for 2021:
- Payment period: January 1 – March 31
- Tax payment is due April 15, 2021
- Payment period: April 1 – May 31
- Tax payment is due June 15, 2021
- Payment period: June 1 – August 31
- Tax payment is due September 15, 2021
- Payment period: September 1 – December 31
- Tax payment is due January 15, 2022
For more information, visit our Quarterly Taxes Guide.
That’s all there is to it! That’s how you can easily prepare for your next tax filing.
If you found this guide helpful, share it with your fellow freelancers! Our goal is to make freelance tax prep easy and straightforward.
We hope that you found this guide useful! Happy filing!
Resources to check out:
Tax Professional or Service
We recommend that you seek guidance from a qualified tax professional or service like Block Advisors or contact an independent tax professional for information about your specific tax situation. If you’d like to learn more, the IRS website has information about the 1099-K, 1099-NEC, and 1099-MISC.