Freelance Writing Taxes | Comprehensive Guide to Self Employed Tax
If you’re a freelancer, you’re probably wondering how to do your taxes. What forms do I need? What can I expense? Who should be sending me forms? In this article, we’ll focus on freelance writing taxes, but generally these principles will apply across the board for almost all freelancers and self employed individuals.
Freelance Writing Taxes and Self Employed Taxes 101
When it comes to taxes for freelancers, there’s nothing quite more confusing or complicated. Just the 1099 forms alone, there are around 10 different types–ranging from well known forms like the 1099-NEC or 1099-MISC, to obscure forms like the 1099-G. In addition to that, you have to worry about other forms like the W9, and Schedules like the Schedule C, and Schedule SE. We’re here to give you the simple answer for what you need. Remember, this article also applies generally to most other types of freelancing and self employment as well.
For the most part, as a freelance writer, you’ll need the following to do your taxes:
Your 1099 forms (generally includes type NEC, MISC, or K): summarizes income you’ve made. You still need to report income even if you did not receive a 1099 for it.
Your W9 forms: your information that you send to clients for recordkeeping.
Filling out Form 1040: your tax return that you send to the IRS to actually file your taxes.
Filling out 1040 ES: a manual calculation sheet to estimate your quarterly tax obligations.
Filling out Schedule C: an add-on to your 1040 to calculate business expenses.
Filling out Schedule SE: a manual calculation sheet to estimated your Self Employment Tax obligations.
Here’s a summary which explains each of these forms, what they do, and why you need them:
| Form Type | What it does | Who does what | Why you need it |
|---|---|---|---|
| 1099-NEC | The most modern form type for freelancer payments. You receive this from clients if they've paid you over $600 | You receive this from clients | You should receive a 1099-NEC from each client, and it summarizes the total amount you've received from each client. You need this know your income and to file your taxes |
| 1099-MISC | The legacy 1099 form that used to be sent out. Some clients may still send this form out incorrectly, but you should be receiving the NEC instead. 1099-MISC is correctly sent out for payments that have to do with rent, royalties, attorney fees, more obscure payments. | You receive this from clients | This is a legacy 1099 format--starting in 2020, you should no longer receive a 1099-MISC for regular freelancing payments. Unless you are receiving payment for obscure services like rent, attorney fees, prizes, royalties or interest, you shouldn't receive a 1099-MISC. If you do receive one, it is used to summarize payments and to file taxes. |
| 1099-K | Same function as a 1099-NEC, but A different type of 1099 that you may receive from payment providers like PayPal, or Venmo, or Stripe. If your payments are processed through a provider, they will be the ones to send you a 1099-K, instead of the client. | You receive this from payment providers | You should receive this if your freelancing pay was processed through a payment provider. As a facilitator of payments, companies like PayPal have to aggregate and send out 1099s, called 1099-K. These are used in the same way 1099-NECs are used, they just come from payment providers and not the client themselves. |
| W9 | A form you send to clients for them to have your information. Info includes name, address, and an identification number like EIN or TIN. | You send this to clients | You send the W9 form to clients to give them information about yourself, or your business. Information will include name, address and an identification number like EIN or TIN. |
| 1040 | The summary tax form that you will submit to the IRS which details every aspect of your taxes from the top line (income), to your expenses, to taxable income, and to your bottom line. | You send this to the IRS | The 1040 is the official "tax return" document that details every line item on your tax return. This is what gets sent to the IRS as the main document, in conjunction with some add on forms. You would send this digitally via a software like TurboTax, or physically in paper form if you prefer. |
| 1040-ES | A separate form you fill out in order to estimate the amount of quarterly tax payments you need to make throughout the year. | You use this to calculate estimated tax payments | This is an add-on to the 1040 form, and serves as a calculation form to estimate your quarterly tax payments. Read our Quarterly Tax Payments section to learn specifics. Usually, this form will be auto populated as you go through guided steps from your tax software, like TurboTax. |
| Schedule C | An add-on to the 1040 that details out your business expenses that you are claiming. For example, you purchased a desk for work, that expense would show up here. | You use this and attach to Form 1040 to detail out your freelancer deductions | This is an add-on to the 1040 form, which details out your business income and deductions, line by line. It would show eligible business expenses that you incurred to operate your business--for example, buying a desk. This is generally auto populated as you go through the step-by-step nature of a tax software like TurboTax. |
| Schedule SE | An add-on to the 1040 that details how much you need to pay in self employment tax. | You use this to calculate how much self employment tax you owe | This is an add-on to the 1040 form, which acts as a calculation sheet to determine how much Self Employment tax you owe. It is generally automatically calculated via software. |
Maximize Your Tax Deductions | Filling Out the Schedule C
First, what is a deduction, or write off? They are simply purchases you make that are required and appropriate to operate your business or practice. These purchases can be claimed to reduce your taxable income. Tax write-offs generally refer to things that you can deduct as expenses. We cover deductions and write offs in detail in our other post, so we will summarize a bit here, instead of going full in depth. As a freelancer, here are things you should think about when it comes to deductions:
Remember, these expenses will go on your Schedule C, which is added to your Form 1040 while you file taxes:
Internet–in today’s world, it’s probably impossible to be a freelancer without using the internet. You’re going to need the internet to converse with clients, deliver completed projections, invoice clients, keep track of hours, etc. etc. To the extent that you use the internet to conduct your business, you can deduct that portion. For example, 50% of the time you spend on the internet is spent on conducting business, then you can deduct 50% of your monthly internet bill as an expense.
Supplies–despite many things being digital, you still will probably need some kind of physical supplies to help you freelance. Maybe you like to jot down short pieces in writing to help you brainstorm, the pen you use, the notebook you write on, and the desk that you put everything on can all be considered supplies.
Computer and software–if you need to upgrade your PC or Mac to conduct freelance, or purchase software like a word processor, or other writing tools to help you be more efficient, then those purchases can be deducted as expenses. This also includes a website you may need to build to showcase your writing portfolio.
Meals and entertainment–although this may be more rare, you’re allowed to deduct meals and entertainment as they pertain to business. For example, as a freelance writer, you’re working on a story where you need to conduct a formal meeting or interview with a possible source. If you meet up at a restaurant or cafe, those expenses can be deducted. For 2021 and 2022 taxes, businesses can take advantage of the Enhanced Business Meal Deduction, which allows businesses to deduct 100% of meals and entertainment, versus the usual 50% limit.
Rent–including the home office deduction: if you dedicate a portion of your home strictly to do your freelance work, you can deduct that portion of the rent as an expense. Similarly, if you actually rent out an office space strictly for business, then you can deduct the entire rent expense.
Any other normal and necessary business expenses–a very broad term, but generally if you can justify that you use something strictly for your freelance writing, you should be able to deduct it. Some examples might include:
A subscription to the New York Times, because you seek writing inspiration or are looking for topics to cover.
You visit a FedEx and paid to make physical copies of something to have on hand for your research or general journalism
You have content in other mediums to accompany your writing, like film or photographs, and have to pay to acquire equipment or hire other specialists to help you create the content, that payment is deductible.
You join a writer’s organization to find others who can mentor you, or have a discussion with and pay a member’s fee. That payment is deductible.
Repairs or maintenance on any equipment you use for your business
Professional fees like legal or accounting fees
Advertising, including actual advertising spend, or marketing materials like business cards or pamphlets you create
Other Deductions not on Schedule C:
Health Insurance Premiums: As a freelancer, we don’t have the luxury of having employer-subsidized health insurance. Instead, we have to pay the full premium from the marketplace to obtain health insurance. However, we’re allowed to deduct from our income the amount we paid in health insurance premiums. This won’t be on the Schedule C, and instead will be directly on Form 1040.
Self Employment Tax | Do Freelancers Pay More in Taxes?
The short answer is–not really.
Put simply:
Self-employed individuals pay the full portion of FICA (15.3%), known as the Self Employment Tax–but they also get to deduct half of the FICA from their income.
Vs a traditional employee:
Traditional employees with an employer pay only half of FICA (7.65%), while their employer pays the other half (7.65%). They do not get to deduct any FICA from their wages.
While freelancers have to pay the entire portion of FICA (Social Security plus Medicare), they get to deduct half of it as an expense in addition to any other business expenses outlined above that help reduce taxable income. Let’s explain.
What is Self Employment Tax? The Self Employment Tax is colloquially used to refer to the full portion of FICA taxes (15.3%) and is named after the Self Employment Contributions Act (SECA), which dictates that those who are self employed must pay both halves of the FICA tax.
The name sounds scary–like a tax that’s especially imposed on freelancers and self-employed individuals, but actually it’s not a tax that’s exclusive to freelancers. In fact, everyone pays a portion of FICA. In my opinion, Self Employment Tax is a poor name as it implies that there’s a penalty to being self employed in having to pay an extra tax.
Schedule SE | Self Employed Taxes Manual Calculator
As we mentioned above, The Schedule SE (stands for Self Employment) is a form you need to attach to your 1040 to detail your self employment tax obligations. It’s basically just a manual calculator to do math by hand. It calculates how much you owe in Self Employment Tax. This amount should basically be something close to 15.3% of your taxable income. Usually, you won’t have to actually manually fill it out–instead your tax software will populate this sheet for you based on your other entries like income and expenses.
What is FICA? | Self Employed Taxes Aren’t Only for the Self Employed
Social Security and Medicare combined are collectively known as “FICA”, referring to the Federal Insurance Contributions Act. It was passed back in 1935 by FDR’s administration and its purpose is to collect contributions to fund the Social Security program. Nowadays, Medicare is a part of the FICA collections.
As a real-life example, if you’ve ever worked a traditional 9-5 job, you may have noticed on your paystub that in addition to the usual Federal and State taxes, part of your pay was “withheld” for Social Security and Medicare–that’s FICA, or quite frankly, half of Self Employment Taxes. So no, self employed taxes aren’t only for the self employed, technically.
When you have an employer (or have a full-time job), your employer pays half of the FICA obligation, and you pay the other half by having it withheld from your paycheck. When you’re self-employed, you are your own employer, and thus, you have to pay both halves. THAT is the “Self Employment Tax”.
In summary,
Self Employment Tax = Both halves of the FICA tax (15.3%), paid by the freelancer. Half of this can then be used as a deduction.
In traditional jobs, half of FICA (7.65%) is withheld from your paycheck, the other half is paid by your employer. None of it can be used as a deduction.
Next, let’s talk about another complicated step that freelancers have to take when it comes to taxes: estimated quarterly tax payments
Estimated Quarterly Tax Payments | An Additional Roadblock to Freelancing
If you thought all the information above was complicated, well, there are even more responsibilities as a freelancer.
To put it simply, because freelancers don’t receive a regular paycheck, they also don’t have taxes withheld regularly. That means you have to make periodic payments to pay for your taxes throughout the year, instead of waiting to pay it all at the end of the year. The government doesn't want you to accrue a huge tax liability and only pay once a year.
Why Do Freelancers Need to Make Estimated Payments? | Using Form 1040-ES
When a freelancer gets paid, they get paid in the full amount, without anything removed. When an employee gets paid, they get certain things removed from their paycheck, most of it being taxes withheld and the amount dictated by a Form W4. This is because the US government wants anyone who’s making money to be paying taxes as the income is being made–which brings us to why freelancers and self employed individuals need to make estimated tax payments. To calculate your estimated tax obligations, you can use Form 1040-ES to manually calculate it, or use a software-enabled solution. We recommend using software.
Since freelancers get paid in full, they haven’t set aside any of their income to pay taxes and the government requires that you not wait until the end of the year. Thus, we must make quarterly estimated payments. You can use form 1040-ES to calculate how much you owe. These payments are estimated, because it’s difficult to pinpoint exactly how much income will be made, and also why the payments are made 4x a year. Here is the Federal schedule for estimated tax payments:
| Tax rate | Taxable Income Range | Amount owed |
|---|---|---|
| 10% | $0 to $9,950 | 10% of taxable income |
| 12% | $9,951 to $40,525 | $995 plus 12% of the amount over $9,950 |
| 22% | $40,526 to $86,375 | $4,664 plus 22% of the amount over $40,525 |
| 24% | $86,376 to $164,925 | $14,751 plus 24% of the amount over $86,375 |
| 32% | $164,926 to $209,425 | $33,603 plus 32% of the amount over $164,925 |
| 35% | $209,426 to $523,600 | $47,843 plus 35% of the amount over $209,425 |
| 37% | $523,601 or more | $157,804.25 plus 37% of the amount over $523,600 |
Your Federal estimated tax payments should include obligations for:
Federal taxes that you owe, based on the standard tax bracket
Self Employment taxes that you owe, based on the 15.3% from FICA
Please note that you also need to make estimated tax payments at the state level, which may have different due dates and payments should include:
State taxes that you owe, based on the state tax bracket
Local taxes that you owe (like city of Los Angeles), based on the local tax bracket
How to Actually Pay Estimated Taxes?
After you’ve calculated how much you owe each quarter, you can use electronic payment portals to make your estimated tax payments.
The Federal government has a DirectPay portal, where you can register with your SSN to make payments.
The State government usually has a similar portal where the same steps can be taken to make payments. For example, here is California’s
Freelance Taxes | A Step-by-Step Guide
I know that we covered an ungodly amount of information in this article, but to summarize, here are the steps for freelance taxes in order:
When the year starts, make an educated guess on what your annual income may be (this can change throughout the year and the IRS generally won’t punish you if you make a poor estimation) and make sure you’re ready to make the appropriate estimated quarterly tax payments at both the Federal and State levels. Set up reminders on your calendars for those general due dates:April 15th, June 15th, September 15th, January 15th of next year
Make sure you have sent out appropriate W9s to your clients, so they have your information
Consolidate and organize all the 1099s you’ve received, including all the types. If a client hasn’t sent you one, request one. Even if you never receive one, you still have to report the income.
Pick a powerful tax software to use like TurboTax, FreeTaxUSA, H&R Block, etc. You may think this is expensive, but it can save you literally hundreds of hours–it’s worth every penny.
Make sure you’ve recorded all eligible business expenses and be ready to detail it out on Schedule C (this can be easily achieved if you have a business credit card/bank account as there will be an automated digital trail)
Allow your tax software to populate all of the forms for you, instead of manually filling out paperwork
Send your tax return to the IRS digitally using your tax software
FAQs:
Do I have to pay taxes on freelance writing?
Yes–you’ll have to pay taxes on all income including income from freelance writing. However, your actual taxable income will generally be lower than what you were paid, since you can deduct eligible business expenses
How much do freelance writers get taxed?
As a freelance writer, you’ll pay tax at the regular Federal tax rate, plus the Self Employment tax of 15.3%, of which half (7.65%) can be deducted from your income. This should be generally comparable, if not less tax, than a traditional 9-5 worker.
Do freelance writers get 1099?
Freelance writers should receive a 1099-NEC from any clients who have paid them more than $600 in a year. Per the IRS, the 1099-NEC is now the standard form for independent contractor payments starting in 2020, versus the previously used 1099-MISC.
