For tax purposes, the IRS treats independent contractors as self-employed individuals. You’ll need to file a tax return with the IRS if your net earnings from self-employment are $400 or more. Along with your Form 1040, you’ll file a Schedule C to calculate your net income or loss for your business.

What taxes do I owe as an independent contractor?

The self-employment tax rate is 15.3%, consisting of 12.4% for Social Security and 2.9% for Medicare. Unless you pay yourself as a W-2 employee, you’ll need to pay the self-employment tax and your income tax directly to the IRS. Typically, you’ll do this when you make quarterly estimated tax payments.

Do you have to file your own taxes as an independent contractor?

If you’re debating between filing your own taxes as an independent contractor or hiring a tax professional, consider your business income and expenses. If you have a straightforward tax situation with few deductions, then it’ll be less expensive to use a tax filing software yourself.

Where do independent contractors report their business income?

Independent contractors use Form 1040 to report and pay their small business taxes. Sole proprietorships and single-member LLCs report business income on Schedule C. Report your business deductions in part two of Form 1040 Schedule C. Source: irs.gov.

When do independent contractors have to file Form 1099?

Businesses file Form 1099-NEC for independent contractors paid more than $600 in the year. Source: irs.gov. But don’t expect a Form 1099-NEC from every client: Non-business clients don’t have to file anything when they pay you.

What can I do to lower my taxes as an independent contractor?

Once you’ve gathered all your records, you can calculate your potential tax deductions. Many of these expenses can be deducted from your total taxable income, which lowers the amount of taxes you owe. Depending on the type of business you run, you should consider making deductions in the following categories: