Tips to Reduce Self-Employment Taxes
When you file freelance taxes, there are unique reporting requirements and deductions that may now apply to you. While you may be responsible for self-employment taxes, there are also a variety of write-offs you might be able to take advantage of to maximize your tax savings. Stay on top of your tax obligations and minimize your tax bill with this freelance tax guide.
The One Big Beautiful Bill that passed includes permanently extending tax cuts from the Tax Cuts and Jobs Act, including increasing the cap on the amount of state and local or sales tax and property tax (SALT) that you can deduct, makes cuts to energy credits passed under the Inflation Reduction Act, makes changes to taxes on tips and overtime for certain workers, reforms Medicaid, increases the Debt ceiling, and reforms Pell Grants and student loans. Updates to this article are in process. Check our One Big Beautiful Bill article for more information.
Key Takeaways
- You'll need to gather and report all your income sources, including what is and is not reported on 1099 forms from clients and possibly 1099-K forms from payment services.
- You're typically responsible for paying a self-employment tax of 15.3%, covering both Social Security and Medicare taxes on your self-employment income.
- You may be able to claim various business-related deductions, such as travel, business meals, office expenses, equipment, and phone and internet service, as long as they're ordinary and necessary for your business.
- You typically can deduct expenses for a home office, provided the space is used exclusively for business purposes.
TurboTax Tip:
Costs for classes and certifications that enhance your business knowledge or are required for your business can be deductible, as long as they're directly related to your current business.
Do I have to pay taxes on the money I make freelancing?
Yes — freelance income is taxable, and in most cases you'll owe both regular income tax and self-employment tax on what you earn. The IRS treats freelancers as self-employed, so you're running your own business in the eyes of the tax code — even if it's a side gig.
Here's what counts as taxable freelance income:
- All payments from clients, whether or not you receive a Form 1099-NEC. Clients must send one if they paid you $600 or more during 2025 (rising to $2,000 for payments made in 2026 and later), but you owe tax on every dollar regardless of whether a form arrives.
- Payments through third-party platforms like PayPal, Venmo, or Stripe. These platforms issue a 1099-K once you exceed both $20,000 in payments and 200 transactions. Remember, you still have to pay taxes on smaller amounts even if you don't get a 1099-K from a third-party platform.
- Cash payments, including under-the-table work and tips.
- Bartered services, valued at the fair market value of what you received in exchange for your work.
- Net earnings of $400 or more, which trigger the requirement to file a return and pay self-employment tax (15.3% for Social Security and Medicare) on top of regular income tax.
- Hobby income, if your activity isn't pursued with the intent to make a profit. You'll report it as other income — not on Schedule C — and you won't owe self-employment tax, but you also can't deduct any related expenses.
Freelance income gets reported on Schedule C, with the net profit flowing to Schedule SE to calculate your self-employment tax.
What income tax forms do freelancers receive?
Your first step as a freelancer is to gather and report all sources of your income. If you're like many freelancers, you have many sources of income.
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1099-NEC Forms
As a freelancer, you're likely to get numerous 1099-NEC forms, (1099-MISC in prior years) one from each of your clients.
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1099-K Forms
If you receive payments through online payment services such as PayPal, you might receive a 1099-K. Payers will also send these forms to the IRS to report your income.
The One Big Beautiful Bill passed by Congress in July of 2025, changes the threshold back to more than $20,000 in payments and more than 200 transactions for the 2025 tax year and retroactively for tax years beginning with 2022.
Over the years, the 1099-K reporting requirements for payments from third-party processors like Venmo and Paypal have changed significantly. In 2021, Congress changed the reporting threshold from more than $20,000 in payments and more than 200 transactions to over $600 in payments regardless of the number of transactions. But instead of using the new $600 threshold right away, the IRS applied the previous reporting threshold for the 2022 and 2023 tax years. For the 2024 tax year, the IRS is using a $5,000 threshold, regardless of the number of transactions.
Keeping track of all your income can be more difficult than if you were a traditional employee, in which case you'd get a single W-2 form for reporting purposes.
How much are self-employment taxes?
In addition to regular income tax, freelancers are responsible for paying the self-employment tax of 15.3%. This tax represents the Social Security and Medicare taxes that businesses pay and that employees have taken out of their paychecks automatically. As a self-employed freelancer you are considered both the employee and the employer.
How much will I owe in freelancer taxes?
Your freelance tax bill comes from two layers: self-employment tax (15.3%) and regular income tax (10%–37%, depending on your bracket). Both are calculated on your net earnings, so deductions reduce both.
Self-employment tax breaks down as:
- 12.4% Social Security on the first $176,100 of net earnings (2025 cap)
- 2.9% Medicare on all net earnings, with no cap
- An extra 0.9% Medicare surtax once net earnings pass $200,000 (single) or $250,000 (married filing jointly)
- Self-employment tax is calculated on 92.35% of your net earnings, and you can deduct half of what you pay as an above-the-line deduction on your income taxes.
A quick example
Say you earned $20,000 freelancing with $4,000 in deductible expenses, leaving $16,000 in net income:
- Self-employment tax: $16,000 × 92.35% × 15.3% ≈ $2,261
- You can claim half of that ($1,131) as a deduction on Form 1040, Schedule 1, reducing your taxable income
- At a 22% federal income tax bracket: roughly $3,271 in income tax
- Total federal tax: about $5,532 (before state taxes)
One more deduction to know about
Many freelancers qualify for the Qualified Business Income (QBI) deduction, which lets you deduct up to 20% of your net business income. You get the full deduction if your total taxable income is at or below $197,300 (single) or $394,600 (married filing jointly) for 2025.
How can I reduce my taxes as a freelancer?
For most people, the ultimate goal when you file your taxes is to reduce your liability to the lowest allowable amount. As a freelancer, you'll likely have more business expenses than a typical employee, and you can take a number of tax deductions not commonly allowed as a regular employee. However, you're only allowed to take deductions that are ordinary and necessary for the operation of your business.
What expenses can I deduct as a freelancer?
As a general rule of thumb, freelancers can write off many expenses including:
- business-related food
- travel and lodging
- office expenses
- required equipment or materials
- phone and Internet service
The IRS requirement for business tax deductions is that expenses must be ordinary and necessary.
Home office
Since most freelancers work from home, the home office deduction can apply. The IRS allows you to take a deduction for many expenses ranging from rent to utilities for the portions of your home that you use as an office.
The catch is that your office space must be exclusively used for your self-employment work; you can't "borrow" your kid's room from 9 to 5 and consider that space your home office nor can you use the same space for a job that you work at as someone else's employee.
Travel and meals
Travel and meals are some of the trickier tax deductions as a freelancer.
You're allowed to deduct the costs of traveling to a job—with the exception being commuting to your office—and business meals with clients are also deductible, but usually at a 50% rate.
However, your expenses have to be necessary for the development and operation of your business. You can't simply write off your vacation costs as "business expenses."
Education and certifications
If you're a learning buff and your interests overlap with your profession, your educational costs may be tax deductible, including:
- Classes to get certifications in your field or to enhance your business knowledge, you can typically deduct those expenses.
- Business-related licensing, registration or certification costs.
As with all freelance expenses, these deductions need to directly relate to your business. For example, a class on gardening skills would not typically be considered ordinary or necessary if you're a computer programmer nor would education that trains you for a new career.
Equipment and supplies
One of the downsides of being a freelancer is that you don't have an employer to buy you equipment and supplies, like a computer or a printer. However, if you need those items to perform your job, they're usually allowed as a deductible expense. Similarly, any other items or materials you need for your business can qualify for a deduction.
To avoid problems with the IRS, keep your business and personal expenses separate. For example, you might run into a gray area if you deduct the entire amount of your cell phone or Internet service while using them only partly for work.
When are freelancer taxes due?
Freelancers face two sets of deadlines: the annual filing deadline for last year's taxes, and quarterly estimated tax payments throughout the current year.
Annual tax return deadline
Your freelance taxes for the 2025 tax year are due April 15, 2026 — the same date as everyone else's. You'll file Form 1040 along with Schedule C (to report your business income and expenses) and Schedule SE (to calculate your self-employment tax). If you need more time, you can request a six-month extension to October 15, but any tax you owe is still due by April 15 — an extension to file is not an extension to pay.
Quarterly estimated tax payments
Because freelancers don't have an employer withholding taxes from their paychecks, the IRS expects you to pay your taxes throughout the year in four installments. You generally need to make estimated tax payments if you expect to owe $1,000 or more in tax for the year. Missing these payments can trigger an underpayment penalty, even if you pay your full balance in April.
For 2026 freelance income, the estimated tax due dates are:
- April 15, 2026 (for income earned January 1 – March 31)
- June 15, 2026 (for income earned April 1 – May 31)
- September 15, 2026 (for income earned June 1 – August 31)
- January 15, 2027 (for income earned September 1 – December 31)
If a due date falls on a weekend or federal holiday, the deadline shifts to the next business day. And if you'd rather skip the January payment, you can — as long as you file your return and pay any remaining tax in full by February 1.
How do I pay my freelancer taxes?
You'll file Form 1040 along with Schedule C and Schedule SE to report your freelance income and self-employment tax, then pay any balance owed electronically through the IRS website, by mail, or through tax-filing services like TurboTax.
The forms you'll file
- Form 1040 — your main individual income tax return.
- Schedule C (Profit or Loss From Business) — where you report your freelance income and deduct your business expenses. The net profit flows to your 1040.
- Schedule SE (Self-Employment Tax) — calculates the 15.3% self-employment tax on your net earnings from Schedule C.
- Schedule 1 — used to claim the above-the-line deduction for half of your self-employment tax.
- Form 1040-ES — used to calculate and pay your quarterly estimated taxes throughout the year.
- Form 8995 or 8995-A — used to claim the Qualified Business Income (QBI) deduction, if you qualify.
How to pay
The IRS offers several free or low-cost ways to send your payment electronically:
- IRS Online Account — pay and view your payment history in one place.
- IRS Direct Pay — pay directly from your checking or savings account with no fee and instant confirmation.
- Debit card, credit card, or digital wallet — through one of the IRS-approved third-party processors (processor fees apply).
- IRS2Go mobile app — pay from your phone using Direct Pay or a card.
- Mail a check with your Form 1040-ES voucher to the IRS address listed on the voucher.
- Pay directly when you file your taxes with TurboTax
Filing with TurboTax
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