Tax Forms for Freelancers
The primary tax form for most freelancers is Schedule SE (Form 1040) to report Social Security and Medicare taxes. You’ll also need Schedule C to report taxable income or loss from your freelance business.
Tax Filing Requirements for Freelancers
- Freelancers must file and pay taxes properly, tracking income and expenses throughout the year.
- Determine whether you operated at a profit or loss and report income and expenses on Schedule C.
Tax Forms Overview
- Common freelancer tax forms include Schedule C, Form 1099-NEC, and Form 1040-ES.
- The IRS has changed reporting requirements for the 1099-K form under the American Rescue Plan Act.
Freelancer Tax Differences
- Freelancers receive 1099 tax forms, not W2s, and are responsible for paying self-employment taxes.
- Employee benefits like unemployment insurance and 401k matches do not apply to 1099 contractors.
Reporting Income and Taxes
- Form 1099 is required for freelance jobs over $600. Self-employment taxes include the self-employment tax of 15.3% in 2020.
- A freelancer must file a 1099 form for payments received through platforms like UpWork.
Worker Status and Tax Forms
- The IRS considers factors like control of work hours to determine employee vs contractor status.
- Contractors need Schedule C and Schedule SE forms, while employees only file a W2.
Freelancers in Canada
- Freelancers in Canada may need an HST/GST account if annual earnings exceed $30,000.
1099 Forms Explained
- Businesses issue a 1099 form to a recipient who has received $600 or more in non-employment income during the tax year.
- Form W-9 is filled out by independent contractors, and Form 1099 details wages paid to them is filed with tax authorities.