If you’re even a moderately successful freelancer, you likely know you have to file a tax return and pay taxes on your income. But, which tax forms do you need to file your taxes?
Here are five Internal Revenue Service (IRS) self-employed tax forms and information that might be relevant to your tax situation.
1. Form 1040, U.S. Individual Tax Return
Most U.S. tax filers use this form even when they’re not self-employed. Whether you need to use it depends on factors such as your age, filing status, and gross income.
If you use this form, you might be able to itemize your tax deductions instead of taking the standard deduction. Whether or not you owe taxes, you might qualify for certain tax credits.
Particularly if you’re a freelancer, you might need to attach specific schedules to your Form 1040.
2. Schedule C to Form 1040, Profit or Loss From Business (Sole Proprietorship)
If you are self-employed, this is an essential form for you. Use this form to report all income and expenses from your business and determine profit or loss.
Starting with income, record all payments you received from your clients. You might have different amounts of gross receipts or sales, gross profit, and gross income.
Schedule C organizes your expense amounts into numerous line items. For example, auto, advertising, depreciation, and supply expenses are all recorded in separate categories.
Although you don’t have to fill out a separate IRS tax form for business use of your car, it makes sense to understand what you can claim for Schedule C. You can only deduct all expenses for operating your car if you use it exclusively for your business.
If you drive for both business and personal use, you must keep careful records of how many miles you drive for each. You can use the standard mileage rate or the actual expenses method to calculate your business mileage deduction.
3. Form 1099-MISC, Miscellaneous Income
After the end of the year, each of your clients should give you a Form 1099-MISC, Miscellaneous Income for the total they paid you that year if it exceeded the baseline amount that the IRS specifies.
Compare every Form 1099-MISC you receive to your records to make sure the amounts are consistent. Your clients file the Form 1099-MISC, with the IRS so you don’t want there to be a notable discrepancy if the client claims they paid you more than they did.
4. Form 8829, Expenses for Business Use of Your Home
You might be able to claim the expenses for the use of part of your home for your business only if you use it exclusively on a regular basis as your principal place of business or a place of business where you meet with patients, clients or customers.
If you determine part of your home is regularly used as your principal place of business, you can calculate the actual expenses of your home office using Form 8829. Those expenses might include mortgage interest, insurance, utilities and repairs.
However, a quicker way to calculate those expenses is to use the simplified method. The qualification requirements are the same, but the process of figuring the deduction and your recordkeeping obligations may be more straightforward.
Fortunately, TaxAct makes it easy by doing the calculations for you. All you have to do is answer a few questions.
5. Schedule SE (Form 1040), Self-Employment Tax
In most cases, self-employed people who earned at least $400 in net income (in 2017) have to pay self-employment (SE) tax. A flowchart on the form helps you calculate whether you can use Short Schedule SE or Long Schedule SE.
The Bottom Line
Always check that you’ve got the correct versions of all IRS tax forms for the year and follow all directions carefully. The forms might change, so you don’t want to use a piece of outdated information.
Using a tax software program, like TaxAct, helps ensure you’re using the correct documents for the current tax year. Simply answer a few questions about your specific tax situation and the program generates the forms for you.