Frequently Asked Questions
What business expenses can freelancers deduct?
In the US, freelancers can generally deduct business expenses that are ordinary and necessary for their work. Common examples include software subscriptions, website hosting, equipment, professional development, business insurance and a qualifying home office. Keeping receipts and clear records is essential, and a tax professional can confirm what qualifies in your situation.
Do freelancers have to pay quarterly estimated taxes?
Often, yes. The IRS generally requires individuals, including sole proprietors, to make estimated tax payments if they expect to owe $1,000 or more when they file their return. Payments are made in four installments during the year, and missing them can lead to penalties.
What is self-employment tax?
Self-employment tax is how freelancers pay Social Security and Medicare, since no employer withholds it for them. The rate is 15.3%, made up of 12.4% for Social Security and 2.9% for Medicare, and it applies if your net earnings from self-employment are $400 or more. You can deduct the employer-equivalent portion of this tax when calculating your adjusted gross income.
How often should a freelancer review business expenses?
Reviewing expenses at least once a year is a good minimum, and a quick monthly check of your accounting records can catch forgotten subscriptions and duplicate services sooner. Look for tools you no longer use, overlapping services and plans that could be consolidated. Small recurring charges can add up to a significant amount over a year.
About the author
Contributing Writer, Wealthtender
Karen Banes is a freelance writer specializing in entrepreneurship, parenting and lifestyle. She writes articles, website content, ebooks and the occasional award winning short story. Her work has appeared in a range of publications both online and off, including The Washington Post, Life Info Magazine, Transitions Abroad, Brave New Traveler, Natural Parenting Group, and Copia Magazine.
Karen provides copy editing and proofreading services, as well as content creation services, at her website KarenBanes.com.