Self-Employment Taxes: Your Questions Answered

If you have a traditional job, where you are an employee who works for an employer and receives a regular paycheck, filing your yearly taxes is generally straightforward. When you begin working as a freelance writer, however, that task becomes slightly more complicated. Whether you are a full-time freelancer or a part-time freelancer, you may find yourself with a number of pressing questions on your mind. If you’re a freelancer, does the government consider you self-employed? How often do you need to file taxes? What forms should you use to file? How much will you have to pay? These are just a few of the questions that may come to mind.

Before you embark on your new career, it can be helpful to do a little research so that you’re more prepared for tax season. In this article, you’ll learn the answers to some of the most frequently asked questions about freelancing, self-employment, and taxes.

How do I know if I am self-employed?

This is probably the most common question that freelance writers find themselves asking at the start of their new careers. Fortunately, this question is usually simple to answer. If you are in business for yourself, including as an independent contractor, then the IRS generally considers you to be a self-employed individual.

Am I still self-employed if I do regular work for one client?

As a freelance writer, any work you do for clients is as an independent contractor. Even if you write regularly for any of your clients, you are not an employee and therefore are not considered an employee for tax purposes. If you are hired full-time to write for a client, then you are considered an employee and not an independent contractor, and any income you earn that way is not considered to be part of your self-employment earnings.

Can I be both self-employed and employed?

Yes. If you work for an employer and also have a substantial enough career as a freelance writer that qualifies you as self-employed, you can be considered both employed and self-employed.

How will I know if I have to pay income tax on my freelance earnings?

If you are a self-employed individual, you may be wondering how much money you will have to earn before you have to file an annual income tax return. If you have made net earnings of $400 or more from your freelancing career in a year, you will need to file. You should also file an income tax return if you are eligible for the earned income credit, the additional child tax credit, or other tax credits.

What taxes do I need to pay?

As a self-employed individual, you must file a federal tax return every year. You will need to pay both federal income tax and an additional self-employment tax.

What is the self-employment tax?

The self-employment tax is a separate tax that has nothing to do with your federal income tax. It is essentially the tax that allows you to pay for Social Security and Medicare. If you work for an employer, these taxes will be taken out of your paycheck every pay period; if you work for yourself, you’ll need to pay them through the self-employment tax. You can either pay this tax throughout the year, or all at once with your annual tax return.

How much is the self-employment tax?

The self-employment tax is 12.4% for Social Security and 2.9% for Medicare, for a total of 15.3%.

How do I know if I need to pay the self-employment tax?

Even if you make enough as a freelance writer that you need to file a tax return, you may not be sure whether you make enough to pay the self-employment tax. You can figure this out on your own by taking your total income as a self-employed individual, then subtracting your total business expenses. If your expenses exceed your income, you have a net loss; if your income exceeds your expenses, you have a net profit and will need to pay the self-employment tax.

How can I make quarterly payments?

If you are required to make quarterly payments on the self-employment tax, you can make them by using the 1040-ES (Estimated Tax for Individuals) form. If it’s your first year as a self-employed freelance writer, you can estimate the total amount you expect to make during the rest of the year.

How do I file my annual income tax return?

As a self-employed individual, you will file your annual income tax return by using either the Schedule C or Schedule C-EZ form, along with the Schedule SE form for the self-employment tax.

What financial records should I keep?

In general, it’s a good idea to hang on to all of your email correspondence with all of your clients. Never delete these emails, and make sure you’ve got printed copies of the most important correspondence. You should also hold on to all documents that are related to your income as a freelance writer. Keep copies of invoices and receipts carefully stored in your home filing systems, along with your previous tax returns. You are free to use any method you like to keep track of your own income, but make sure that the information is easily accessible, so that you don’t have to spend hours searching for it when you need to. The more organized you are, after all, the readier you will be to file your taxes every year.

If you are thinking of pursuing a career as a freelance writer, it’s important that you are able to find the right resources to help you with your career. Writers Work is here to provide you with the resources you need to find your way in the challenging—but highly rewarding—world of professional freelancing. From our intuitive document editor to our wide-ranging job search engines, our features can make freelancing much more approachable for anyone. When it comes to starting out your freelancing career on the right foot, Writers Work can make all the difference.