According to the freelancers’ union, America has approximately 57 million freelancers, representing 35% of the workforce. Whether you are a freelance writer, artist, website designer, app developer, or offer any skill as a freelancer, you must pay your taxes.
The Internal Revenue Service (IRS) requires every self-employed person making $400 or more to file income tax returns.
Paying taxes as a freelancer is different from paying as an employee, and knowing what to do can help keep you from getting into trouble with the taxman.
Here are various tax forms you will need as a freelancer to help you stay compliant.
Form 1099
Form 1099-MISC is one of the most, if not the most important, tax documents for a freelancer. This form is usually sent to the freelancer by a client who pays them $600 or more. In the form, the client declares the amount of money you have received from them as payment for work done.
Form 1099 provides freelancers with the easiest tallying their annual income come the tax season. Although you do not have to attach your Form 1099 when filing your taxes, it is a good idea to keep them in case the IRS comes calling.
If, for any reason, you lose your form 1099, you can easily replace it using this 1099-NEC generator in just a few minutes. All you will need is to answer a few questions, preview your document, and download it to print.
Schedule C
It may happen that you did not receive a form 1099 because you didn’t receive any payment of $600 or more from any client. But that does not mean that you are off the taxman’s hook. You will still have to report all your income and expenses on a Schedule C tax form.
In part one of Schedule C, you must fill in all your income, including the income filled in form 1099. After that, you will list all your expenses in parts two to five. Once you are done filling, you can check to see if you can claim a deduction from the IRS.
Schedule SE
Schedule SE is used to file due taxes on net earnings. The information you provide on schedule SE is critical to the social security administration because it provides the organization with information essential for figuring your social security program benefits.
Every self-employed person must fill this form irrespective of age. This tax applies even to persons that are already getting Medicare and social security benefits.
If you were an employee, your Medicare and social security taxes would be deducted by your employer.
Form 8829
For freelancers using the home as their office space, you may be eligible for some tax relief. But there are some conditions to receiving this benefit. The part of your home you use as an office has to be separate from the other parts and used exclusively as an office.
If this tax relief applies to you, you will need to file a Form 8829 to claim it from the IRS. This benefit does not apply to employees working from home. Only self-employed people can claim a home office deduction.
Most freelancers work from home, which means almost every freelancer can qualify for this deduction.
Final words
It’s important to always check that you have all the necessary tax forms to ensure that you are tax compliant as a freelancer. Additionally, you will need to ensure that the forms you have are the correct versions.
If you have lost or misplaced any of these necessary forms, you may need to replace them. Most forms are easy to replace using online form generators.
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