Self-Employment and Taxes

• Schedule C Form: Profit or Loss from Business

This form attaches to the 1040 form and is where you report your income and expenses (saved receipts from business expenses) if you are freelancing or working on a project that will hopefully produce income in the long run (i.e. a screenplay, Web site business, or book manuscript, to name a few). If you are solely freelancing, and do not receive a regular paycheck from a day-job where you may work twenty or more hours a week and they deduct taxes for you, then you should fill out Schedule C. Whether you receive a 1099 from an employer or not (by law, if you are paid more than $600 from an employer, they have to send you a 1099), it is your responsibility to report any income.

• 1040 Schedule SE Form: Self-Employment Tax

Depending on your earnings as a freelancer, you’ll be able to fill out a short form or long form. Self-employment rate is 15.3 percent, with 12.4 percent going toward Social security (old age, survivors, and disability insurance) and the other 2.9 percent going toward Medicare (hospital insurance). You can deduct this tax from your adjusted gross income, which you will report on the next form, your good old friend, the 1040.

• 1040 Form: U.S. Individual Income Tax Return

Once you’ve filled out all of the above, and your financial life is simple, then the final step is to fill in the info from the other forms on the final 1040 form.

All tax forms and instructions can be found on the IRS Web site and detailed instructions on the ins and outs of the 1040 form process can be found on 1040.com. Make sure to use the forms and instructions from the IRS site, which are current and up-to-date.