Freelancer Tax Guide

The five things every freelancer owes

• Federal income tax on net profit
• Self-employment tax (Social Security + Medicare, 15.3%)
• State income tax (in most states)
• Quarterly estimated payments (if you'll owe over $1,000)
• Local taxes — city or county, depending on where you operate

The freelancer tax workflow

• Separate business bank account and card from day one
• Categorize transactions monthly
• Track mileage and receipts the same week they happen
• Set aside 25–30% of every payment for taxes
• Pay quarterly estimates by April 15, June 15, Sept 15, Jan 15
• Send clean books to a CPA at year end

Top deduction categories

• Home office (simplified or actual method)
• Mileage and vehicle expenses
• Software and subscriptions used for the work
• Phone and internet — business-use percentage
• Continuing education, courses, and certifications
• Self-employed health insurance
• Retirement plan contributions (SEP IRA, Solo 401(k))
• Half of self-employment tax (above the line)

When to graduate from sole prop to S-Corp

Most freelancers stay sole prop or single-member LLC until net profit consistently clears ~$50K. Past that, electing S-Corp status can save real self-employment tax — but it adds payroll, reasonable comp rules, and another return. Run the math with a CPA before electing.