If you work for yourself, tax season can feel like a maze. The good news is you don’t need a PhD to get it right. Below you’ll find straight‑forward advice on what you must report, which expenses you can deduct, and how to avoid the most common mistakes.
What You Need to Report
First off, every self‑employed person files a Schedule C with their Form 1040. This form captures your business income and expenses. Even if you earned just a few hundred dollars, the IRS expects you to report it. Forgetting a side gig can trigger penalties, so keep a simple spreadsheet or use an app that tracks every payment you receive.
Don’t confuse the self‑employment tax with income tax. The self‑employment tax covers Social Security and Medicare and is calculated on 92.35% of your net earnings. In 2025 the rate stays at 15.3%, so you’ll owe roughly $1,410 for every $10,000 of net profit.
Deductible Expenses You Shouldn’t Miss
One of the biggest advantages of being self‑employed is the ability to write off business costs. Below are the top categories that most freelancers overlook:
Home office: If a room is used exclusively for work, you can claim either the simplified $5 per square foot or the actual expense method. Remember to measure the space and keep a photo for records.
Equipment and supplies: Laptops, phones, software subscriptions, and even a decent chair qualify. For items over $2,500, you can either depreciate them over several years or elect Section 179 to expense the full amount in the first year.
Travel and meals: Business trips, flights, hotels, and 50% of restaurant bills are deductible. Keep receipts and note the purpose of each trip – the IRS loves details.
Vehicle mileage: If you drive for work, the IRS standard mileage rate (about 65¢ per mile in 2025) is easier than tracking gas, repairs, and insurance separately.
Professional services: Accountant fees, legal advice, and even freelance platform fees count as ordinary business expenses.
Every expense needs a receipt or a digital record. Storing everything in a cloud folder with clear naming (e.g., "2025‑06‑Office‑Chair‑Receipt.pdf") saves you time if the IRS asks for proof.
Another tip: make quarterly estimated tax payments. The IRS expects four payments (April, June, September, and January). Missing one can lead to penalties, but the payment calculator on the IRS website makes it easy to stay on track.
Finally, consider hiring a tax professional for the first few years. A good CPA can spot deductions you missed and help you set up a bookkeeping system that runs on autopilot.
Bottom line: keep good records, claim every legitimate expense, and pay your quarterly taxes on time. With these habits, self‑employment tax won’t feel like a nightmare any longer.
Being self-employed comes with the freedom to be your own boss, but it also means you've got to handle taxes yourself. Knowing how much to set aside can save you from unexpected surprises. This guide breaks down exactly what you need to know, from understanding tax brackets to keeping track of deductible expenses. Whether you’re a freelancer, contractor, or small business owner, planning ahead could be a game-changer for your finances.
1099 workers, often gig workers or independent contractors, navigate unique tax situations compared to traditional employees. Understanding taxation on self-employed income involves grasping concepts like self-employment tax, estimated quarterly payments, and deductible expenses. Additionally, self-employed individuals might find tips on maximizing deductions and avoiding tax pitfalls helpful. This guide aims to simplify these tax components and provide clarity and useful advice for better management of 1099 income.
