- Tax returnsSchedule C and S corporation returns, with every 1099 reconciled.Learn more about Tax returns →
- Bookkeeping & estimatesBooks kept up monthly and quarterly estimates calculated for you.Learn more about Bookkeeping & estimates →
- LLC or S corporationWhat an LLC does and doesn’t change, and when an S corporation pays off.Learn more about LLC or S corporation →
- Contractor or employeeWhen a client should be treating you as an employee.Learn more about Worker classification →
Four habits that matter most
- Set money aside from every payment. Income tax plus 15.3% self-employment tax adds up quickly. Many freelancers move 25% to 35% of each payment to a separate savings account, depending on income and state.
- Pay quarterly estimates. Due April 15, June 15, September 15 and January 15. Paying 100% of last year’s tax (110% above $150,000 of income) through estimates avoids the underpayment penalty.
- Keep a separate account. One bank account and card for the business make income and deductions easy to prove.
- Record expenses as they happen. Snap receipts and log mileage as you go. Rebuilding a year in April misses deductions.
The forms you’ll receive
- Form 1099-NEC from clients who pay you $2,000 or more in 2026 (the threshold was $600 through 2025).
- Form 1099-K from payment platforms such as PayPal or Stripe when payments exceed $20,000 and 200 transactions in a year.
- All income is taxable whether or not you receive a form, so your own records, not the 1099s, should drive the return.
Deductions worth knowing
- Home office. Space used regularly and exclusively for the business. The simplified method allows $5 per square foot, up to 300 square feet; the actual-expense method can be larger.
- Health insurance. Self-employed health insurance premiums are generally deductible, if you aren’t eligible for an employer plan.
- Half of self-employment tax is deductible in figuring income tax.
- Equipment, software, coworking space, professional development and business travel.
Retirement plans
A solo 401(k) lets you defer up to $24,500 of earnings for 2026 as the “employee,” plus an employer contribution as the business, up to $72,000 in total (more with catch-up contributions after 50). A SEP-IRA is simpler but has no employee deferral, so it usually allows less at lower incomes.
LLC, S corporation and local taxes
- An LLC alone doesn’t change your federal tax. It adds liability protection, and New Jersey and New York charge annual fees and require filings.
- An S corporation election can reduce self-employment tax once profit is consistently well above a reasonable salary for your work.
- Consulting is a “specified service” business, so the 20% QBI deduction phases out at higher incomes.
- New York City. Freelancers doing business in the city may owe the 4% Unincorporated Business Tax, which applies to sole proprietors, with credits that reduce or eliminate it at lower incomes.
Frequently asked questions
How much should a freelancer set aside for taxes?
Many set aside 25% to 35% of each payment, depending on income and state. The right number comes from a projection of your federal, state and self-employment tax.
When are quarterly estimated taxes due?
April 15, June 15, September 15 and January 15. Paying 100% of last year’s tax (110% if your income was over $150,000) through estimates avoids the underpayment penalty.
Do I have to report income if I didn’t get a 1099?
Yes. All income is taxable whether or not a client sends a 1099-NEC or a platform sends a 1099-K.
Should a consultant form an LLC or an S corporation?
An LLC adds liability protection but doesn’t change federal tax. An S corporation election can reduce self-employment tax once profit is well above a reasonable salary.
How much can a freelancer put into a solo 401(k) for 2026?
Up to $24,500 as an employee deferral plus an employer contribution, up to $72,000 in total, with additional catch-up contributions after 50.