Tax Guide for Freelancers & Self-Employed

Filing taxes as a freelancer, independent contractor, or self-employed individual comes with unique challenges and opportunities. This comprehensive guide will help you navigate the 2026 filing season and potentially maximize your refund.

Unlike W-2 employees, self-employed individuals must pay both the employee and employer portions of Social Security and Medicare taxes, known as self-employment tax.

Good News: You can deduct half of your self-employment tax from your gross income, reducing your taxable income.

If your net self-employment income is $400 or more, you must file Schedule SE and pay self-employment tax.

1. Home Office Deduction

If you use part of your home exclusively for business, you can deduct home office expenses:

• Simplified Method: $5 per square foot, up to 300 sq ft (max $1,500)
• Regular Method: Deduct actual expenses (rent, utilities, insurance) based on percentage of home used for business

2. Business Equipment & Supplies

• Computer, laptop, tablet, smartphone (if used for business)
• Software subscriptions and licenses
• Office furniture and equipment
• Professional tools and supplies
• Books, magazines, and educational materials

3. Vehicle & Mileage

If you use your vehicle for business:

• Standard Mileage Rate (2025): $0.70 per mile (estimated)
• Actual Expense Method: Deduct actual costs (gas, maintenance, insurance) based on business use percentage

Important: Keep detailed mileage logs with dates, destinations, and business purposes.

4. Health Insurance Premiums

Self-employed individuals can deduct 100% of health insurance premiums paid for themselves, their spouse, and dependents as an adjustment to income (not an itemized deduction).

5. Marketing & Advertising

• Website hosting and domain fees
• Social media advertising
• Business cards and promotional materials
• Email marketing services
• SEO and digital marketing expenses

6. Professional Services

• Accounting and bookkeeping fees
• Legal fees
• Professional memberships and dues
• Business insurance premiums

7. Education & Training

Deduct costs for courses, workshops, conferences, and certifications that maintain or improve skills in your current business.

If you expect to owe $1,000 or more in taxes, you must make quarterly estimated tax payments:

2026 Quarterly Tax Deadlines

• Q1 (Jan-Mar 2026): Due April 15, 2026
• Q2 (Apr-May 2026): Due June 16, 2026
• Q3 (Jun-Aug 2026): Due September 15, 2026
• Q4 (Sep-Dec 2026): Due January 15, 2027

Self-employed individuals have excellent retirement savings options with high contribution limits:

• Separate Business & Personal: Use a dedicated business bank account and credit card
• Track Everything: Keep receipts and records for all business expenses
• Use Accounting Software: QuickBooks, FreshBooks, or Wave can automate tracking
• Mileage Log: Use apps like MileIQ or Everlance for automatic tracking
• Save for 7 Years: IRS can audit returns up to 6 years back (7 for safety)

• Not paying quarterly taxes: Results in penalties and interest
• Mixing personal and business expenses: Makes deductions harder to prove
• Forgetting the QBI deduction: Qualified Business Income deduction can reduce taxes by up to 20%
• Not tracking mileage: Loses valuable deductions
• Overlooking small expenses: They add up over the year

The Qualified Business Income (QBI) deduction allows eligible self-employed individuals to deduct up to 20% of qualified business income.

For 2025, the full deduction is available if your taxable income is below:

• Single: $191,950
• Married Filing Jointly: $383,900

Above these thresholds, limitations may apply based on your business type and W-2 wages paid.

• Consider working with a tax professional who specializes in self-employment
• File Schedule C (Profit or Loss from Business) with your Form 1040
• Don't forget state and local tax obligations
• Set aside 25-30% of income for taxes throughout the year
• Review your estimated tax payments quarterly and adjust as needed