How Freelancers Pay Taxes

Written By: Jerry Bowlin

One thing that people in the field of freelance writing do not realize is that yes, they are most likely going to have to pay taxes on their earnings. They say that there is no certainty in life except for death and taxes, and that holds true in the field of freelance writing as well. If a freelancer is an American citizen and they earn more than $400 per year on their freelance writing work, then they must pay taxes to Uncle Sam. Moreover, since freelance writers are considered self-employed, they usually must pay about 15.3 percent in self employment tax”the normal 7.65 percent that would be withheld from an ordinary employed person’s paycheck and the 7.65 percent that an employer normally would match.

Having to do one’s own withholding is one of the rare pitfalls to being a self-employed person. There have been many people who did not understand U.S. tax law, let the tax time in April roll around, and then neglected to pay their self-employment tax. Needless to say, they were in for a very rude awakening come refund time because they were hit with very harsh penalties. Thus, whether one likes it or not, paying the self-employment tax is important. Here are some tips for freelancers who are paying this tax for the first time:

1. Contact all of the agencies they have done freelance work for and get a 1099.

The IRS will expect a tax from people who make more than $400 in a year from any individual agency. The first step is for someone to get all 1099s from companies with whom they have made more than $400. When they receive their 1099 it will usually resemble an ordinary IRS Form and will have “Miscellaneous Income” as a heading. The 1099 will show the total income for the year from only one company. A good rule of thumb is to add up all of the amounts on the 1099 forms and then multiply that amount by the 15.3 percent rate.

2. Gather up all business expense receipts.

Literally anything that is used for a freelance writing business can be deducted. However, there are certain rules that must go into effect as well. For example, a home office and the utilities used for it, such as heat, water, electricity, and the like, can be deducted, but not the whole house. A good rule of thumb here is to measure the square footage of the home office and divide that from the square footage of the whole house in order to get a proportional amount of the utility bill that can be deducted. Rent and a mortgage payment at times can be deducted as well. Additionally, freelancers should make sure to research all possible deductions for a freelance writing business on Part II of Schedule C of the IRS Publication 535.

3. Fill out a schedule C form.

This is also called a Form 1040, or “Profit or Loss from Business.” One enters their income in Part I, expenses in Part II, costs of goods or services in Part III, vehicle information in Part IV, and other expenses in Part V. When claiming expenses, it is always best to be able to provide full documentation. Thus, saving all receipts and other necessary items is crucial.

4. Fill out a Schedule SE Form as well.

This is perhaps the most important part of the process because this is where a freelance writer can deduct the normal employer’s portion of the withholding tax on their taxes. That extra 7.65 percent could certainly come in handy later on.


Paying self-employment tax is a necessary evil, but there are people out there who can help self-employed people take the guesswork out of it. There are a couple other options to consider, including paying taxes on an estimated basis four times a year. Freelancers can do this by filling out a 1040-ES. As a final word of caution to freelancers: enjoy the writing and the freedom that comes from being self-employed, but make sure not to get in trouble with Uncle Sam.