Freelancer and Self-Employed Tax Filing
Nobody withholds tax for you when you are self-employed, which makes both the deductions and the quarterly payments your responsibility. We handle both.
What this service covers
Self-employment changes the tax problem in two ways. You owe self-employment tax on your net profit on top of income tax, covering the Social Security and Medicare contributions an employer would otherwise have shared with you. And because nobody withholds on your behalf, you are expected to pay in quarterly instalments through the year, with a penalty if you underpay. The offset is that genuine business costs reduce your taxable profit, and freelancers routinely under-claim them — home office, business mileage, equipment, software, professional fees, health insurance premiums and half of the self-employment tax itself. EvoTax reconciles your 1099s against what you actually received, claims the deductions you are entitled to and can substantiate, computes your self-employment tax, and sets a quarterly schedule so the following year does not produce a surprise.
Reviewed by Teja K, CPA · last reviewed . General information, not tax advice for your situation. How we research and review this.
You are paying two taxes, and only one of them is obvious
Self-employment changes the arithmetic in a way that catches people who move from a salaried job. On employment income your employer quietly pays half of your Social Security and Medicare contribution alongside the half withheld from your payslip. When you are self-employed there is no employer, so you pay both halves yourself — that is self-employment tax, and it sits on top of income tax rather than instead of it.
It runs at 15.3% of net profit: 12.4% for Social Security up to an annual wage base, and 2.9% for Medicare with no ceiling at all, plus an additional Medicare surcharge above a threshold. The one piece of good news is that you deduct half of the self-employment tax against your income tax, which self-filers routinely miss.
The second change is that nobody withholds on your behalf, so the government expects payment in instalments through the year rather than in a lump at the end of it. Underpay and there is a penalty, calculated as interest on the shortfall for the period it was outstanding — which means it accrues even if you settle the whole balance in April.
The safe harbour is the number that actually protects you
Estimated payments are generally due in four instalments across the year, with the date shifting when it lands on a weekend or holiday. The obligation typically begins once you expect to owe $1,000 or more for the year.
What matters more than the dates is the safe harbour, because it converts an uncertain forecast into a fixed target. Pay either 90% of the current year's liability or 100% of the prior year's — 110% if your income was above a threshold — and the underpayment penalty does not apply, even if you end up owing considerably more in April.
The prior-year route is the useful one for anyone with variable income, and freelancers usually do have variable income. You do not need to predict a good year accurately; you need to cover last year's number. For a first year of self-employment there is no prior year to use, which is exactly when people get caught, so the first year is the one to set deliberately rather than by instinct.
An extension moves the filing deadline, not the payment deadline. Tax owed is still due in April and interest runs from then, which is why an extension is a filing tool rather than a cash-flow one.
The deductions freelancers under-claim, and the ones they over-claim
Genuine business costs reduce taxable profit, and the pattern we see is under-claiming on the unglamorous items and over-claiming on two specific ones.
- Home office. Deductible where part of your home is used regularly AND exclusively as your principal place of business. Exclusively is the demanding word — a dining table used in the evenings does not qualify. Both a simplified per-square-foot method and an actual-expense apportionment exist, and they can differ substantially, so both are worth computing.
- Business mileage. Deductible for business travel, which does not include commuting. The standard rate is simpler; actual costs sometimes produce more. Either way it requires a contemporaneous log, and a reconstruction produced after a query is worth much less than a record kept at the time.
- Equipment and software. Frequently claimable in full in the year of purchase rather than depreciated, which is usually the better outcome for a freelancer.
- Health insurance premiums. The self-employed health insurance deduction is available above the line and is one of the most commonly missed items entirely.
- Retirement contributions. A SEP-IRA or solo 401(k) allows materially larger contributions than a personal IRA, and this is the largest legitimate lever most profitable freelancers have.
- Meals and entertainment. The one most often over-claimed. Business meals are partially deductible in defined circumstances; entertainment generally is not, and a meal with no business purpose is not deductible because it was paid from a business account.
If you invoice clients in India, or freelance from a visa
Two situations recur among this audience and neither is addressed by generic freelancer advice.
Income from Indian clients is still US taxable income if you are a US tax resident. There will usually be no 1099, because a 1099 is a US reporting form and an Indian client has no obligation to issue one — but the absence of a form has never been what creates or removes the obligation to report. Where the Indian client has deducted TDS, that Indian tax is generally creditable against your US liability on the same income, so reporting it properly is not the same as being taxed twice. Payments received into an Indian account also bring that account into FBAR and Form 8938 territory, which is a disclosure question separate from the income question.
Visa authorisation is the other, and it is not a tax question. Someone on H-1B is authorised to work for a specific sponsoring employer, and independent freelance work generally falls outside that authorisation. An H-4 holder without an EAD is not authorised to work at all. The tax system will tax income whether or not the work was authorised, so the fact that a return can be filed is not evidence that the work was permitted. We will prepare an accurate return; whether the activity is permitted under your status is a question for an immigration attorney, and we will say so rather than imply otherwise.
This is worth stating directly because the two systems do not talk to each other, and people reasonably but wrongly infer that being able to report income means being allowed to earn it.
Where this comes from
- IRS — Self-Employed Individuals Tax Center: obligations, forms and estimated payments
- IRS — About Schedule C, Profit or Loss from Business
- IRS Publication 505 — Tax Withholding and Estimated Tax, including the safe-harbour rules
- IRS — Home office deduction: the regular and exclusive use tests and both calculation methods
- IRS Publication 535 — Business Expenses: what is deductible and what substantiation is expected
Benefits & What You Get
Deductions claimed, and substantiated
Home office, mileage, equipment, software and professional fees claimed on a basis that holds up if questioned.
1099s reconciled to reality
We match what was reported to you against what you received, so misreported 1099s do not become your problem.
Self-employment tax computed properly
Including the deduction for half of it, which is routinely missed by self-filers.
Quarterly schedule set
We calculate your instalments and the safe-harbour amount so you avoid underpayment penalties.
Entity advice when you outgrow it
Once profits justify it, we tell you whether an S-election would reduce your employment tax.
How It Works
Gather income and costs
We collect your 1099s, payment records and expense summary for the year.
Build Schedule C
We construct your profit and loss, apply allowable deductions and compute self-employment tax.
File the return
We prepare and e-file the federal and state returns with all business schedules.
Plan the quarters
We set your estimated payment schedule and amounts for the coming year.
Pricing
Single-business freelancer or contractor
Several income streams or schedules
Four instalment calculations and reminders
Monthly categorisation and reconciliation
Final pricing depends on the complexity of your case. Contact us for an exact quote.
Frequently Asked Questions
What is self-employment tax and how much is it?
It is your Social Security and Medicare contribution as a self-employed person, and it runs at 15.3% of net profit — 12.4% Social Security up to the annual wage base and 2.9% Medicare with no ceiling, plus an additional Medicare surcharge at higher incomes. An employee splits this with their employer; self-employed people pay both halves, but can deduct half of it against income tax.
When are quarterly estimated taxes due?
Generally 15 April, 15 June, 15 September and 15 January of the following year, with the date moving when it falls on a weekend or holiday. You are normally expected to pay if you will owe $1,000 or more for the year. Paying either 90% of the current year liability or 100% of the prior year — 110% at higher incomes — puts you inside the safe harbour and avoids the penalty.
Can I deduct a home office?
Yes, if part of your home is used regularly and exclusively as your principal place of business. Exclusively is the demanding word — a dining table used for work in the evenings does not qualify. You can use the simplified per-square-foot method or the actual-expense method apportioning rent, utilities, insurance and repairs. We compute both and take the larger.
What if a client never sent me a 1099?
You still report the income. The 1099 is the payer's reporting obligation, not the trigger for yours — all business income is reportable whether or not a form was issued. The bigger risk runs the other way: a 1099 issued for more than you actually received, or issued twice, will be matched against your return by the IRS, so it is worth reconciling rather than assuming the forms are right.
Should I form an LLC or S-Corp as a freelancer?
An LLC gives you liability protection but does not by itself change your tax — a single-member LLC is taxed the same as a sole proprietor. The tax saving comes from electing S-Corp treatment, which lets you split profit between salary and distribution and cuts employment tax on the distribution. That only pays once profit is high enough to absorb the extra payroll and filing cost, so it is a question of scale rather than a default step.
I freelance for clients in India. Is that US taxable?
If you are a US tax resident, yes — worldwide income includes fees from Indian clients, and there will usually be no 1099 because an Indian client has no US reporting obligation. The absence of a form does not remove yours. Where the client deducted TDS in India, that tax is generally creditable against your US liability on the same income, so reporting it correctly is not the same as paying twice. Separately, if the fees are paid into an Indian account, that account counts toward the FBAR aggregate test and possibly Form 8938 — a disclosure question distinct from the income question, and one people miss because they are thinking about the invoice rather than the bank balance.
Can I freelance on an H-1B or H-4 visa?
That is an immigration question rather than a tax one, and the honest answer is that we are not the right people to give it. An H-1B authorises work for a specific sponsoring employer, and independent freelance work generally sits outside that. An H-4 holder without an Employment Authorization Document is not authorised to work. What we can tell you is that the tax system taxes income regardless of whether the underlying work was authorised — so being able to file a correct return is not evidence that the activity was permitted. If there is any doubt, speak to an immigration attorney before you take the work, not after.
You May Also Need
Background reading and tools
The guides cover the federal treatment in detail. The calculators let you check a number before you commit to anything.
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