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Self-Employed Freelance Taxes: Everything You Need to Know

Brett Bowen

Running a business — and that’s exactly what you’re doing as a freelancer — isn’t all sunshine and rainbows.

There are lots of things freelancers have to do behind the scenes to keep their business running, and not all of them are fun. Some of these tasks flat out suck.

One of the biggest headaches encountered by any self-employed individual is how to do taxes as a freelancer. Paying your self-employed taxes can be a minefield if you don’t have the right advice or help, but luckily there are some ways you can get through this minefield unscathed.

We talked to a number of accountants, lawyers, and tax experts to get their best tips for managing your self-employed taxes as a freelancer.

Whether you’re just learning how to become a freelance writer or you’re a seasoned pro, the tips below will help you handle your freelance writer taxes properly.


What is Self-Employment Tax?

Self-employment taxes cover Social Security and Medicare taxes for people who work for themselves. These taxes are similar to the taxes withheld from the pay of most regular employees.


What is the Self-Employment Tax Rate?

The current self-employment tax rate is 15.3%. The total is comprised of two parts — 12.4% for Social Security and 2.9% for Medicare.


Tax Tips for Freelancers & Self-Employed Individuals

Let’s be honest — none of us like thinking about taxes. But it’s a necessary part of running a business.

The good news is if you follow the tips below, managing your freelancer taxes can be a little less of a headache.

Disclosure: Some of the links below are affiliate links, which means at no extra cost to you, we may earn a commission if you click through and make a purchase.

1. Keep Detailed Records for Income & Self-Employment Tax Deductions

This sounds like a no-brainer, but you’d be surprised at how many freelancers do not keep detailed records of all of their income and expenses related to their freelance work.

If you’re a freelancer with multiple sources of income, you’re likely to get multiple 1099-NEC forms from each one of your clients. When it comes time to pay your freelance taxes, having a record of every dollar you’ve earned will make it much easier for you or your accountant. 

It’s not just the money you’re making that you need to account for, though.

Keep track of all your expenses related to your writing career in order to maximize write-offs on your self-employed taxes.

If you’re a writer, expenses like your internet bill, new computer hardware, research materials, or even food or lodging in some cases, can potentially qualify for self-employment tax deductions. To make it easier to keep track of, consider even opening a new bank account or credit card to use solely for freelancer-related expenses.

Even more important is the home office write-off on your freelance taxes. If you have a space in your home dedicated for your freelance writing business, make sure to read up on what the IRS has to say about the home office deduction.

Kari Brummond at TaxDebtHelp.com told us that there are plenty of additional write-offs that freelancers often neglect, including self-employed health insurance premiums, education, subscriptions, business software or online publications, and more.

“The deductions vary based on a writer’s unique situation. Take some time regularly to track your expenses. If you leave everything until tax time, you’ll typically have records of your earnings but nothing for your deductions, and this will give you a higher tax bill than you should pay,” Brummond said.


2. Set Aside Funds For Taxes Each Time You Get Paid

One of the easiest ways to get into trouble as a self-employed writer is not paying your freelancer taxes quarterly, or not setting aside a portion of your income each time you get paid (or at least once a month) for when tax time comes.

Freelance writers don’t have their taxes taken directly out of their invoices, meaning it can be far too easy to forget that upwards of 15.3% of that income is already accounted for by Social Security and Medicare.

Any accountant or tax planner will tell you that as a freelancer, you’ve got to be proactive about planning for these taxes every single month. And pay quarterly if you can – it’s a lot easier than being stuck with one massive bill each April.

“While not officially an owner, the IRS is the silent business partner who must always get paid. Freelancers shouldn’t be surprised by their tax obligations, whether their federal income tax obligations or the Social Security and Medicare taxes” cautioned John Strohmeyer, proprietor of Strohmeyer Law PLLC in Houston, a firm specializing in helping individuals and their business with tax planning. “While it’s possible to delay paying these taxes, it’s better to have a plan in place to withhold the funds and make payments as required so that the IRS is taken care of before they come knocking.”


3. Don’t Neglect Your Retirement

Retirement will be here before you know it.

Aside from setting aside money for your freelance writer taxes, make sure you’re contributing regularly to a retirement fund.

You might think retirement is a long way away, and it might be, but it’s important to start building that nest egg as soon as you have a little to squirrel away each month, even if it seems like a small amount. 

No matter how much you can afford to put away for retirement each month, there are many different products you can start investing in now, like a Solo 401K or SEP IRA.

Dan Herron CPA/PFS CFP® at Elemental Wealth Advisors, told us that there are multiple options which are ideal for freelance writers.

“Depending on your level of net income, you can utilize a Solo 401K or SEP IRA and utilize the contribution amount as a ‘For AGI’ Deduction. If you use a SEP IRA, you have until the filing deadline (including extensions) to contribute,” Herron said.

Not only does saving for retirement help you secure a better financial future, but it can also offer benefits at tax time, reducing your overall liability.

Whitney Nash, CPFA, President & CEO at Nashional Self-Directed, explained that contributing to a Self-Directed Solo 401(k) retirement plan “allows [self-employed individuals] to shave off up to $57,000 or $63,500 for people 50 and over, for 2020 ($58,000/$64,500 for 2021) of their taxable income. Doing so not only reduces their taxable income considerably, but it could possibly bring them down to a lower tax bracket. As a bonus, the fee to establish the plan and the nominal annual fee to maintain the plan can be business tax deductions as well. This plan can still be established and contributed to for a 2020 deduction if both are done before the person files their 2020 tax return.”

To help determine which retirement plan might be best for you, you might want to speak with a professional who spends every day consulting on such matters — which brings us to our next point…


4. Hire a Qualified Professional If Possible

As a freelance writer, you may be tempted to try and go it alone and do everything related to your freelancer taxes yourself. While it will certainly save you some dough to do your taxes yourself, you may end up paying too much or too little and getting yourself in a world of financial hurt. 

Your best bet is to work with a qualified CPA who can help ensure your business finances are in order and that you pay as little in taxes as legally possible.

Whether you hire an accountant/tax professional or not, good accounting software can take much of the burden off of you. Don’t just keep track of your income and expenses on some random spreadsheet or spiral notebook.

In our opinion, Freshbooks (free 30-day trial) is the best accounting software for freelance writers. It makes it a breeze to track income and expenses, send freelance invoices to clients, and have records of everything you need when tax season rolls around.

Freshbooks costs just $15 each month for up to five employees and offers real-time invoice tracking, cloud support for all-device access, and automatic payment reminders. Best of all, it’s easy to use and very affordable. 

Then, when it comes time to file your taxes, you can either hand off your records to a CPA, or if you’re up to filing your taxes yourself, use a program like TurboTax.

Try it free for 30 days to see how it can make paying your freelance writer taxes a breeze. 


5. Avoid These Common Pitfalls

In addition to the steps you can take outlined above, there are several common mistakes you should try to avoid as a freelance writer.

  • Don’t assume that your earnings are too little to incur taxes. If you earn just $400 or above as a freelance writer, you have to pay self-employed taxes.
  • Don’t try to avoid declaring all of your freelancing earnings. Getting into a bad situation with back taxes or even an IRS audit could put a huge damper on your freelance writing career at any point in your career. Even if you didn’t earn enough with a particular client for them to issue you a 1099, you still have to claim that income when filing your freelancer taxes.
  • Don’t wait until the last minute to prepare your taxes. I get it, nobody actually wants to sit down and get their taxes prepared. I can think of a million things I’d rather do before dealing with my taxes, but the reality is the longer you procrastinate, the bigger the risk is of something going wrong. Don’t wait until April 14th to get your act together. Start ASAP and get it over with.
  • Don’t spend your freelance income loosely. If you’re serious about your freelance writing career, treat your freelancing income as you would any other income. Even if it’s just a few hundred dollars at first, if you want to become a full-time freelance writer, re-invest that money into your business. We all start somewhere. 

Have any questions about doing your self-employed taxes as a freelancer? Comment below and let us know.

Freelance Writing Websites: 5 Essentials to Attract Ideal Clients

Freelance Writing Websites: 5 Essentials to Attract Ideal Clients

Writer Websites: 5 Tips to Attract Freelance Clients. Makealivingwriting.com

What’s the secret to creating one of those writer websites that get’s noticed?

You know…an ideal client lands on your writer website. And you’ve got all the right stuff there to get that person to call, email, or connect on social media.

Great writer websites can:

  • Generate freelance writing leads
  • Grow your network
  • Show off your portfolio
  • Help you stand out as the writer in your niche

…while you sleep.

Chances are pretty good you already know writer websites help the pros stand out.

But what does your writer website look like?

Maybe you keep putting it off or avoid giving it an upgrade because you’re not a graphic designer, web developer or tech genius.

Sound familiar?

If you aren’t sure where to start or how to improve your online presence, you’re in luck. I’m going to show you the 5 essentials writer websites need to help you stand out, move up, and earn more.

How to Find Entry-Level Freelance Writing Jobs for Beginners

How to Find Entry-Level Freelance Writing Jobs for Beginners

Best Freelance Writing Jobs for Beginners. Makealivingwriting.com

Right now, a record-high number of people are considering a freelance writing career. My inbox is overflowing with questions from newbies. And the first question is: “Where can I find freelance writing jobs for beginners?”

If that’s you, sending hugs! I totally feel your confusion. The freelance marketplace is a big, complicated place. There are lots of types of paid writing, and different kinds of clients, too.

I’ve been helping writers get started for a dozen years now. And I know how mystifying it can be. You feel like there’s a door you need to find, a person you need to know, a secret you must unlock to become a freelance writer.

But really, the path to freelance writing jobs for beginners is simple.

You need to find someone willing to let you write for them. That’s it.

You get a few samples and boom — you have a portfolio to show. And you’re on your way.

There are fairly simple, break-in writing assignments that newbies tend to get. I’m going to outline what they are below.

But first, I need to explain something…