How to File Self-Employment Taxes

Maybe you’ve started your own business or taken on a side gig. Either way, self-employment comes with its own set of tax rules.  

But don’t worry. The good news is that filing self-employment taxes doesn’t have to be overwhelming. You might even qualify for tax credits and deductions that could lower what you owe. 

In this guide, we’ll walk you through your tax obligations, provide some pointers for maximizing deductions, and show you how to file self-employment taxes with TurboTax.

Who pays self-employment taxes?

You’re required to pay self-employment (SE) tax if you earn at least $400 in net self-employment income. This applies to freelancers, gig workers, small business owners, and independent contractors. There’s also a special rule for church employees, who must pay self-employment tax if they earn a net income of at least $108.28. 

SE tax covers Social Security and Medicare taxes. In a traditional work setting, your employer would withhold these taxes for you. But since you’re your own employer, you’ll need to set money aside to pay for these taxes. This is typically done by paying estimated taxes throughout the year.  

The IRS uses simple guidelines to determine who’s an employee and who’s an independent contractor. If you meet these guidelines, you’re considered an employee: 

• Your employer controls what you do and how you do your job. 
• Your employer controls most business aspects of your job. This includes how you’re paid, who provides tools and supplies, and more. 
• You receive employee-type benefits, such as insurance and vacation pay. 

If you operate as an independent contractor, you provide services that aren’t controlled by an employer. Because of this, a different set of rules applies to you when it comes to taxes. If you’re an independent contractor or self-employed, for tax purposes, you have a business. This is true even if you haven’t incorporated any sort of entity.

What taxes do you need to pay as a self-employed individual?

When you’re self-employed, you’re responsible for paying the following taxes: 

• Social Security 
• Medicare 
• Federal income 
• State income (if applicable) 

The self-employment tax rate is 15.3% of your net earnings from self-employment. This breaks down to: 

• 12.4% for Social Security taxes (including survivors, old-age, and disability insurance) 
• 2.9% for Medicare taxes (or hospital insurance) 

You also have to pay federal income tax, which is based on a marginal tax rate. Federal income tax rates range from 10% to 37%. Depending on how much you earn, portions of your income will be charged at the corresponding rate for each tax bracket. 

For example, in 2025, your first $11,925 of income is taxed at 10% (individual single taxpayers), but earnings of $11,925 to $48,475 are taxed at 12%. Say you earn $45,000 this year from your freelancing. The first $11,925 would be taxed at the 10% tax rate, and the remaining $33,075 would be taxed at 12%. 

Note: For federal income tax, each tax rate’s income bracket is doubled for married couples filing jointly. 

State income taxes vary. Some states, like North Carolina and its uniform 4.5% tax rate, have flat tax systems. Others, like Washington state, don’t have state income tax at all. Meanwhile, states like California use progressive tax systems where higher earners pay higher rates. If you transition from being an employee to self-employment, the switch will affect your taxes. Start by making sure you have all the forms you need to file your taxes—Form 1099-NEC is the most important, as it often reports much of the income you have been paid for your work. You can use our tax calculator to save time and determine how much your tax liability may be during the year.

When do you pay self-employment taxes?

Knowing when to pay is a key part of successfully filing self-employed taxes. Since you don’t have an employer withholding them for you, you need to pay estimated taxes throughout the year. 

If you expect to owe at least $1,000 in taxes when you file your return (after withholding and refundable tax credits), make sure you’re completing these payments every quarter. Generally, estimated tax payments are due quarterly: 

• April 15 (for the January 1–March 31 period) 
• June 15 (for the April 1–May 31 period) 
• September 15 (for the June 1–August 31 period) 
• January 15 of the following year (for the September 1–December 31 period) 

Note: If a due date falls on a Saturday, Sunday, or legal holiday, your payment is considered on time as long as you submit it by the next business day. 

You may also need to pay estimated taxes quarterly if you anticipate your refundable tax credits and withholding to be less than either of the following (whichever is smaller): 

• 90% of the tax shown on the current year’s tax return, or 
• 100% of the tax shown on the prior year’s tax return (110% if your AGI for 2024 was greater than $150,000)

Special rules apply to fishermen, farmers, nonresident aliens, certain higher-income individuals, and some household employees. Keeping track of taxes as a self-employed individual can be tricky, but don’t worry. TurboTax can help with quarterly tax dates, calculating your tax liability, and paying your estimated taxes. You can also use TurboTax Premium—designed for self-employed taxpayers like you—to get every tax deduction and the highest refund possible.

How to file self-employment taxes

Filing self-employment taxes for the first time can be overwhelming, so we’ll walk you through the basics. From determining your tax filing status to filling out the right tax forms, here’s how to file taxes when self-employed.

1. Determine your tax filing status and business structure

You must have either a Social Security number (SSN) or an individual taxpayer identification number (ITIN) to pay self-employment tax. You’ll also need to determine your business structure. Common options include: 

• Sole proprietorship: You run a one-person business where you and the business are legally the same. 
• Independent contractor: You provide services to clients, but you aren’t an employee. You are treated as a sole proprietor for tax purposes.
• Freelancer: You typically work on short-term projects or gigs for multiple clients. 
• Limited Liability Company (LLC): This flexible business structure protects your personal assets while allowing pass-through taxation (profits taxed on your return). Some states allow single-member owned LLCs, which are taxed as sole proprietorships. More than one member of an LLC results in similar tax treatment to a partnership.
• S corporation: This corporate structure allows profits to pass through to you and other owners while avoiding double taxation. Owners who provide services to the company are required to  pay themselves a salary and can take distributions. 
• Partnership: You co-own your business with one or more people who share profits, losses, and responsibilities. It can be general or limited in liability. Partnerships are not taxed. Rather, the income of the partnership passes through to the individual partners’ tax returns.
• Corporation: Your business is legally a separate entity from you (and any other owners). This structure may allow stronger liability protection but involves more paperwork and formalities. 

Your business structure determines the tax forms you need to file (more on this later).  

Your filing status affects how you file your taxes and the tax rates that apply to you. Your filing status also affects your income tax rate. Knowing your status (e.g., head of household, married filing jointly, or single) can help you file self-employed taxes accurately.

2. Track your income and expenses throughout the year

It’s essential to keep accurate records of all sources of income throughout the year. This may include: 

• Self-employment income: This includes money earned as a freelancer, consultant, independent contractor, or other independent worker. It’s often reported on Form 1099-NEC, 1099-K, or in the form of a check, credit card, or cash payment. 
• Other income: You’ll need to report other income on your tax return. This may include prizes, awards, gambling winnings, jury duty pay, and distributions from certain types of accounts (like health savings accounts). 

While you’re at it, maintain detailed records of deductible business expenses, like: 

• Home office costs 
• Software 
• Travel 
• Equipment 

• Marketing expenses 
• Miles driven for business purposes

Doing this can help you get the deductions you deserve—and maximize any tax refund you might be eligible for. Using accounting software (like QuickBooks) or a spreadsheet can help you stay organized. It can also give you real-time data on your income and expenses, making it easier to track your finances throughout the year.

3. Calculate and pay self-employment taxes

You’ll need to pay income tax (federal and possibly state) and self-employment tax. If you expect to owe $1,000 or more in taxes, you may need to make quarterly estimated tax payments. 

Remember, the self-employment tax rate is 15.3% of your net earning from self-employment. This includes 12.4% for Social Security and 2.9% for Medicare taxes. 

Your federal income tax rate depends on your marginal tax rate. It ranges from 10% to 37%. State individual income tax varies by state, though some states don’t have it. 

 4. Fill out the right tax forms

Whether self-employed or not, you’ll most likely need to complete Form 1040 (individual income tax return). But self-employed individuals often must file additional forms or schedules, including: 

• Schedule C (Form 1040): Schedule C (profit or loss) is where sole proprietors report business income and expenses. You can determine your net profit or loss by subtracting your expenses from your gross revenue. 
• Schedule SE (Form 1040): Use Schedule SE to calculate your federal self-employment tax due. 
• Schedule A (Form 1040): Fill out Schedule A if you take itemized deductions. 

Other forms you may receive as a freelancer, independent contractor, or self-employed person include: 

• Form 1099-NEC: This form reports nonemployee compensation (like payments to an independent contractor). 
• Form 1099-MISC: File this form to report payments not otherwise subject to self-employment tax (like rent, prizes, or medical payments). 
• Form 1099-K: This reports any payments (including credit, debit, or payment app payments) made for goods or services rendered throughout the tax year. Learn more about Form 1099-MISC vs. 1099-K. 
• Form 1040-ES: Use the Form 1040-ES worksheet to figure out how much you owe in estimated taxes. You’ll need your adjusted gross income (AGI), taxable income, taxes, deductions, and tax credits for that year. 

If you have a traditional job, you may also need to include other forms, such as Form W-2 when you prepare your tax return. Keep any tax forms in a safe place. That way, you’ll have them when it’s time to file.

5. Claim all deductions and file your taxes

Doing self-employed taxes can be complicated, especially if you have multiple sources of income or run a business. While you can go the DIY route, using tax software (like TurboTax Premium), a tax professional can ensure accuracy. 

Be sure to file by your deadlines, as you could get hit with a failure-to-file penalty. This applies to missed extension deadlines as well.  

And finally, get those tax deductions. Every deduction, like those for home office or mileage expenses, can help lower your taxable income.

How to maximize deductions and credits for self-employment taxes

Being on the hook for all these taxes can be financially intimidating, but the good news is that you‘ll be able to reduce self-employment taxes with tax credits and deductions. Here are some of the most common self-employed tax deductions and credits. 

Note: You generally won’t have to pay self-employment tax if your net earnings for the year are less than $400. Claiming eligible deductions and credits can also reduce your overall tax liability—so you never pay more than you legally owe.

Home office deduction

 The home office deduction can help you maximize your tax write-offs. If you regularly and exclusively use a home office specifically for your business, you can claim the home office deduction related to that space. Expenses you may be able to deduct as part of the home office deduction include a portion of home-related expenses like real estate taxes, mortgage interest, rent, utilities, and insurance, based on the square footage of your home office space.

Part-time hires

Are your kids out of school on holiday or a school break? Hire them! Sole proprietors who hire their kids to run deliveries, clean the office, answer phones, or enter data can deduct those wages on Schedule C, as long as the compensation is reasonable for the type of work performed. 

Wages paid to children under 18 are exempt from Social Security and Medicare taxes. They also aren’t subject to federal unemployment tax if they are under 21. It’s also likely that your child won’t owe income taxes on these wages (since they will be below the filing threshold), which lowers your family’s overall tax bill considerably.  As a bonus, your children can contribute these wages to retirement accounts such as a Roth IRA to save for the future.

Retirement planning

Opening a retirement plan can help lower your taxable income. The most common retirement plan for self-employed individuals is a simplified employee pension (SEP) plan. These plans let you contribute up to the lesser of:  

• 25% of your net earnings from self-employment, or 
• The IRS limit ($69,000 for 2024 or $70,000 for 2025) 

You can make contributions up until the extended October 15 tax deadline (if you file an extension).  Compare that to the cap on IRA contributions—$7,000 ($8,000 if 50 and over) for 2024 and 2025. These traditional IRA contributions also must be made by the April 15 tax deadline, even if you have filed an extension.

Mileage

Employees of a regular 9-to-5 job cannot deduct the cost of driving to and from work. In contrast, if you’re self-employed and driving to see a client, heading to a meeting, or going to work from another location, you can deduct these costs. Commuting costs, such as driving to an office maintained outside of the home, are never deductible.

You can claim 67 cents per mile for business miles driven in 2024 or 70 cents per mile in 2025, plus the cost of parking and any tolls you paid. Be sure to track your business mileage so that you have substantiation for your mileage deduction.

Business trips

Tip for the traveling pros: If you’re flying to another US city primarily for business, you can deduct 100% of the travel costs. Remember that while you are traveling, you can also expense your hotel or lodging and your meals, though this can only be deducted for the days you’re spending on business. This means if you spend the weekend for pleasure after a week of business meetings, you can deduct 100% of the airfare but not the weekend night (or other non-business days) lodging and meals.

Health insurance

Most employers include health insurance in your benefits package, but how does that work if you’re self-employed? 

Since you have to pay your own health and dental insurance premiums, you may be eligible to deduct those premiums on your taxes. Your health insurance deduction can’t exceed your self-employment income. 

As a self-employed taxpayer, you qualify for the self-employed health insurance deduction as an adjustment to income whether you claim the standard or itemized deduction. You can only deduct medical and dental expenses that exceed 7.5% of your AGI, but the expenses for your insurance premiums are not part of this calculation when you are self-employed.. Think you might qualify for these or other write-offs? Try our deductions calculator.

Paying self-employed taxes

If you’re self-employed, chances are you’ll have to pay taxes on your earnings. This includes self-employment tax (Medicare and Social Security taxes), federal, and sometimes state income tax. You may also need to make quarterly estimated tax payments. 

You can pay your estimated taxes by mail when you file your 1040-ES. More conveniently, you can pay online or use the IRS2Go app on your phone. You can also pay your estimated taxes by calling the IRS. For payments via mail, the US postmark date is the payment date. 

Be aware that any tax write-offs or deductions you claim will be included on your 1040. Depending on which credits you’re claiming, you may need to file additional forms specific to those credits with your tax return. 

No matter what moves you made last year, TurboTax will make them count on your taxes. Whether you want to do your taxes yourself or have a TurboTax expert file for you, we’ll make sure you get every dollar you deserve and your biggest possible refund—guaranteed. You can also use QuickBooks Solopreneur to track your income, expenses, and mileage. You can capture receipts year-round and then transfer your business information to your TurboTax return, making tax time a breeze.