Tax Prep Guide for Freelancers: 1099, W-2 & Small Business Filing

Tax Prep Guide for Freelancers: 1099, W-2 & Small Business Filing

 


Hi creatives, it’s your good ‘ole finance friend Gina (Finance Friends Forever alumni) 🖐🏽, and I’m here to remind you: It’s time to get your taxes done. Woot woot! But no need to fear, ‘cause we got some handy tips for ya here (love how that rhymes). If you are anything like I used to be (pre-taking the FFF Course), you’re probs crying in Spanish about your taxes. But, since taking the course, I’ve learned some easy tips and tricks I'd love to share with you to make filing your taxes a breeze.

Between today and April 15th, it’s time to start crunching those numbers and gathering all your tax forms 📄. The sooner you get it done, the sooner you can stop stressing, and *if you do it right*, the sooner you can go 🛍️ shopping 🛍️ (or paying down some of your debt is always a great option, too!). To help you get through tax season and go back to being your creative self, we made you some easy-to-follow checklists below.

Note: This guide is written primarily for US-based creatives, but we know that our community is international 🌏. Here are some guides you can reference if you’re a freelancer in the following countries: United Kingdom, Australia, Canada


Tax Deadlines for the US


The deadline to file taxes in the US for the previous fiscal year is April 15th, but you don’t need to (and maybe shouldn’t…) wait til then to do it! We’ve put together this guide to help you lock👏in👏  and compile all your necessary documents stress-free.

Note: If you’re a self-employed freelancer in the US, you should be paying estimated taxes on a quarterly basis—April 15th is the deadline for the first 2025 quarter of estimated taxes. Explore your options for paying your quarterly estimated taxes here.



First, check in with your financial situation: Do you need help filing your taxes?


⚠️ Rule of thumb: If you have a lot of anxieties around taxes, consult a CPA! It’s better to feel safe than sorry, and there’s no harm in being extra careful.

You could probably file taxes on your own if you…
  • are an employee and receive a W-2 form—your employer takes out your taxes for you, so filing should be fairly simple
  • don’t own property
  • don’t have a lot of investments
  • didn’t move states last year

    You might need to consider working with a CPA if…
  • you’re a freelancer/self-employed and receive 1099’s from companies/businesses you’ve worked with
  • you’re a business owner
  • you have multiple streams of income (ie, you’re a salaried employee and freelance on the side)
  • you just experienced a major life event that could impact how you file your taxes (ie, marriage, new children, home ownership, etc.)

    Psst. Need a tax accountant? Check out our recs here and get a quote!
  •  

    Find tax checklists below:

    For Freelancers (Current or New)
    For Business Owners
    For Individuals with Both W-2 and 1099 Income

     
     
     
     
     

    New to Self-Employment?

    Welcome to the world of ✨ freelance ✨. If this is your first year of freelancing (and maybe you didn't expect to! aka, quarterly taxes may come as a surprise 😬), or you just need pointers for surviving this tax season, this checklist is for you.

    For Freelancers (1099 Contractors/Self-Employed)

    Compile all of your income documents 📑

    • Collect all your 1099-NEC/MISC forms from your clients

    • Gather any other records of income from invoices, PayPal, Venmo, Zelle, etc.

    Add up your deductible business expenses.

    • Keep a consistent record of your deductible expenses! Pro-tip: Take pictures of receipts and keep all business meetings/excursions/meals on your Google calendar in the very small chance that you may be audited.

    ⭐️ What counts as a valid deductible expense? Here is a non-comprehensive list (Find more guidance on freelancer deductions here):

    • Any reference materials: design books, magazines, courses

    • Costs of hiring a CPA

    • Business insurance

    • Traveling for a business

    • Office space/rent if you work from home: Check out this Nerd Wallet guide for home owners and renters

    • Work-related memberships (Adobe subscriptions, co-working spaces, etc.)

    • Tech (new work computers, equipment)

    • Wifi/Internet

    • Student loan payments (collect any 1098-T forms for tuition payments or 1098-E forms for student loan interest payments)

    • Courses, certifications

    Note: Not sure if you can write it off? Google “tax deductions [year]” to check or ask your CPA.

    Deduct your retirement contributions

    • Did you contribute to a SEP-IRA, Solo 401(k), or SIMPLE IRA accounts? If so, tally them up and compile proof, as contributions are deductible.

    Note: Not all retirement accounts are eligible for tax deductions.

    Deduct Health Insurance Costs & Medical Expenses

    • Collect proof of your health insurance premium payments if you’re no longer on a guardian’s healthcare plan!

    • Those contributions may be deductible if you contribute to an HSA (Health Savings Account).

    • Did you pay medical and dental expenses for yourself, your spouse, or dependents the previous year? They may be deductible expenses—read more here.

    • If you have a child, you should track childcare costs for a possible Child and Dependent Care Credit

    Gather proof of your self-employment tax payments

    • Calculate your quarterly estimated tax payments, if applicable, and compile proof of your Social Security and Medicare tax contributions.

    Are you doing business as an LLC or S-Corp?

    • If yes, ensure that you pay the appropriate taxes for your business structure.

    Review your tax return from the previous year

    • Double-check that you’ve made all applicable deductions and any potential carryover expenses (e.g., depreciation).

    Bonus Tips for getting through tax season(s) as a freelancer:

    • As a freelancer, you should save 30% of your freelance income to pay your estimated taxes quarterly! Oftentimes, freelancers underestimate how much they owe in taxes, so it might save you some stress by saving 30% of your income rather than falling short. Explore your options for paying your quarterly estimated taxes here.

    • Open a business checking account associated with your freelance income and expenses. This makes it so much easier to separate business and personal spending!

     
     
     

    Own a small business?

    For Business Owners (LLC, S-Corp, C-Corp)

    Prepare all of your business income statements

    • Collect all profit & loss statements and balance sheets.

    • If you have contractors and/or employees, make sure all issued 1099s and W-2s are accurate.

    Add up your business expenses, which include but are not limited to:

    • Rent, utilities, and office supplies

    • Employee payroll, benefits, and retirement contributions

    • Loan interest payments and business credit card statements

    • Travel, meals (See this guide for meal & entertainment deductions)

    Add up any additional business-related tax deductions

    • Businesses (freelancers, this may apply to you too!) may deduct expenses including, but not limited to:

      • Depreciation of assets (vehicles, equipment, etc.)

      • Advertising and marketing expenses

      • Professional services such as legal, accounting, consulting

      • Contributions to charitable organizations

    Review your estimated tax payments

    • Make sure your quarterly payments were made accurately

    • Adjust payments for next year based on profit trends

    Deduct your retirement contributions

    • Contributions to 401(k), SEP-IRA, SIMPLE IRA, or profit-sharing plans may be tax deductible. 

    Verify your payroll tax compliance

    • Double-check that your payroll taxes (Social Security, Medicare, federal/state withholdings) are all accounted for when filing.

    • Do you have any employees or contractors? Don’t forget to file all necessary forms: W-2s, 1099s, Form 940/941

    Review the following business tax credits

    • R&D Tax Credit (if applicable)

    • Work Opportunity Tax Credit

    • Energy-efficient business expenses

    Have you met all state and local tax requirements?

    • Verify sales tax obligations, if applicable

    • Ensure compliance with state business tax filings

    Lastly, review the prior-year returns

    • Carry forward losses, tax credits, or depreciation schedules

    For Individuals with Both W-2 and 1099 Income

    Collect all your income documents from the previous year

    • W-2s from employers

    • 1099s from freelance work

    • 1099-DIV, 1099-INT (for investment income, dividends, and interest)

    • 1099-G (for unemployment or state tax refunds)

    • 1099-R (for retirement withdrawals)

    Add up your deductible work expenses (for 1099 Income) with receipts

    • Check the above section for examples of deductible expenses

    Make sure you’re paying your estimated quarterly taxes from your freelance income!

    • For freelance income: pay quarterly estimated taxes if necessary (more guidance in the freelancer section above)

    • For W-2 income: ensure FICA taxes were withheld from W-2 earnings to offset 1099 obligations

    WTF… please explain in simple terms?:
    When you work a W-2 job, your employer automatically takes out social security and medicare taxes from your paycheck. When you freelance (1099), no taxes are taken out automatically, so you have to pay them yourself.

    If you have both a W-2 job and freelance income, the taxes taken from your W-2 paycheck might help cover what you owe from freelancing. But if your W-2 job isn’t withholding enough, you might still owe extra taxes on your freelance income.

    So, to be extra safe, check your W-2 pay stub to see how much tax is being taken out (To check, use the Tax Withholding Estimator). If it’s insufficient to cover your freelance taxes, you may need to pay estimated taxes or adjust your W-2 withholding.

    Maximize tax-advantaged accounts

    • Contribute to a 401(k) or IRA (traditional or Roth), especially if your employer can match your contributions!

    • Consider an HSA or FSA for medical expenses.

    If you have considerable deductible expenses, consider itemizing your expenses instead of claiming a standard deduction.

    • Read more on itemized vs. standard deductions here. Choose the option that will lower your taxable income the most!

    Do you need to submit a new W-4 form to your employer?

    • Reasons for updating your W-4 include: getting a second job, changes in your spouse’s/household income, getting married or divorced, unemployment period, and/or welcoming a baby into your family.

    • If your W-2 job didn't withhold enough, adjust your W-4 for next year. Be proactive about avoiding tax penalties by double-checking with the IRS withholding calculator.

    Review last year’s return for missed deductions

    • Make sure you carry over any tax credits or deductions from previous years

     
     
     

    Wasn’t that easy? I know right—soo easy! (pssst. Can I tell ya a secret?…I learned it all from taking the Finance Friends Forever Course. Check out the course curriculum here to see if it would be a good fit for you! We cover taxes and everything personal finance: budgeting, investing, health insurance, retirement, you name it. 

    Got more Q’s about the course? Check out our FAQ page, or email us at hello@ilovecreatives.com if you’re not seeing your question!

     

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