Shake Logo

A Brief Tax Primer for Freelancers: Part 2 (Forms)

By Anna Wang, Legal Researcher at Shake

In our previous post, we went over the taxes you have to pay as a freelancer, including the income tax and the self-employment tax. In this post, we’ll go over the different forms you’ll need to use to file your taxes.

W-9 (Request for Taxpayer Identification Number and Certification): Submit this to your clients. In this form, you provide your taxpayer identification number to the people who pay you. Your clients use this to report payments they make to you.

1099-MISC (Miscellaneous Income): Your clients submit this to you, if they have paid you at least $600. This is a summary of the payments they have made to you for the year. They don’t need to send this form to you if they’ve paid you less than $600. You still need to report that income regardless of whether your clients submitted a 1099-MISC to you.

Submit all of the following forms to the IRS.

1040-ES (Estimated Tax): As mentioned in our previous post, you should submit estimated taxes on a quarterly basis. Use this form to estimate your taxes.

1040 (U.S. Individual Income Tax Return): As you probably know, you report your income tax on the 1040. You must use 1040 and not 1040EZ or 1040A, because you are self-employed.

1040 is the gift that keeps on giving–you’ll need some other forms to fill out the 1040:

Schedule SE (Self-Employment Tax): You will need to use this form to pay your self-employment tax (Social Security and Medicare tax) if you had more than $400 in net earnings from your self-employment. You will need to have calculated your income or loss on Schedule C or Schedule C-EZ before filling out Schedule SE.

Schedule C (Profit or Loss from Business) or Schedule C-EZ (Net Profit from Business): You will use one of these forms to calculate your income or loss. There are a few requirements for you to use Schedule C-EZ (e.g., your business expenses must have been $5,000 or less). See the instructions on Schedule C-EZ to see if you qualify.

Schedule D (Capital Gains and Losses) – Report the short- and long-term capital gains and losses from the sale of your capital assets. A capital asset is any property you own, such as real estate, stocks, patents, and jewelry. Capital gains and losses are calculated by taking the difference between the amount sold and the value of the object at the time you acquired the object (usually the cost). Disposition of a capital asset you’ve held for a year or less qualifies as short-term, while disposition of a capital asset you’ve held for more than a year qualifies as long-term. Short-term gains are taxed at your ordinary income rate, while long-term gains are taxed at a lower rate.

There may be other forms you may need to fill out, and you will have other filing requirements for your state and local taxes. If you can, hire a tax preparer to handle your taxes. Not only will it make the process easier, but as someone who is self-employed, you may be eligible for deductions for your home office, travel, business meals, etc., and the preparer may be able to find deductions that you missed.

In our final post in this series, we’ll go over the top five tax deductions for freelancers.