You might also be able to deduct the employer-equivalent portion (50%) of your self-employment tax on your 1040. The Schedule SE tax form helps you calculate your self-employment tax, which you’ll then report on your standard Form 1040. That’s why the IRS wants you to cover the whole 15.3%. 2Īt a normal full-time job, your Social Security and Medicare taxes are taken out of your paychecks automatically-and your employer covers half of those taxes. But as a freelancer, you’re considered both an employee and an employer. The self-employment tax is 15.3% and solely exists to cover your Social Security and Medicare taxes. Why so much? Because you have to pay both income tax and the self-employment tax. Got small business tax questions? RamseyTrusted tax pros are an extension of your business. Dave recommends you save as you go by setting aside around 25–30% of every freelance check you receive in a separate savings account to cover the taxes. If you earn $400 or more from freelance work in any given year, you are responsible for paying taxes on those earnings. What are the basics? There are three main things you need to know: What’s the minimum I have to earn to pay freelance taxes? And if you’re not careful, you could lose a large chunk of your freelance income to an enormous tax bill. And let’s be honest, who doesn’t want more cash in their pockets?īut here’s some real talk: Whether you’re a full-time freelancer or just getting your side hustle on, it will impact how you file your taxes. You get to call the shots!īut even if you already have a full-time job, freelancing is a great way to earn some extra money. 1Īnd why not? As a freelancer, you choose your hours, what projects to take on, and where you work. In fact, freelancers are expected to make up the majority of the U.S. That’s how it’s done, baby! And you’re not alone. You go out, kill something, and drag it home every day. Being a freelancer means being your own boss, and that can be awesome.
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