Start from your situation
Freelancer, gig worker or one-person business
No employer withholds anything for you. That changes three things: what you owe, when you pay it, and what you can deduct.
1. All of it is income
Client payments, app payouts, crypto, barter: everything counts, with or without a form (§ 61). From 2026, clients only have to send a 1099-NEC once they pay you $2,000 or more in a year (§ 6041). Payment apps and marketplaces report on Form 1099-K above $20,000 and 200 transactions (§ 6050W). Below those lines nothing gets reported, but the money is still taxable.
2. Deduct your business costs
You're taxed on profit, not revenue. Section 162 allows "ordinary and necessary" business expenses: software, equipment, a share of your phone, travel for work, a dedicated home office. Keep receipts. You report all of it on Schedule C.
3. Budget for self-employment tax
On top of income tax, you pay 15.3% Social Security and Medicare on about 92% of your profit once it passes $400 (§ 1401). On $50,000 of profit that's about $7,065. Half of it comes back as a deduction.
4. Claim the 20% pass-through deduction
Most freelancers can deduct up to 20% of their business profit, capped at 20% of taxable income (§ 199A). It's taken even if you use the standard deduction.
5. Pay during the year, not just in April
If you'll owe $1,000 or more, the code expects quarterly estimated payments (§ 6654). Missing them brings an interest-like penalty.
| Payment | Due |
|---|---|
| 1st | April 15 |
| 2nd | June 15 |
| 3rd | September 15 |
| 4th | January 15 (next year) |
6. Don't miss the credits
Self-employment earnings count as "earned income" for the EITC and the refundable part of the child tax credit.
Rule of thumb
Many freelancers put 25–30% of every payment in a separate account for taxes. The right share depends on your income, state and family, so treat it as a starting point, not a rule.