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Resources for Freelancers & Self-Employed

Educational guides and resources to help you navigate self-employment taxes and maximize your deductions.

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Tax Fundamentals

Understanding Self-Employment Tax

Self-employment tax is the Social Security and Medicare tax that self-employed individuals must pay. Unlike W-2 employees where the employer pays half, you're responsible for the full amount.

  • Rate: 15.3% (12.4% Social Security + 2.9% Medicare)
  • Calculation: Applied to 92.35% of your net self-employment income
  • Deduction: You can deduct half of your SE tax from your income taxes
  • 2025 Wage Base: Social Security tax applies to the first $168,600 of earnings

How to Make Quarterly Tax Payments

If you expect to owe $1,000 or more in taxes, you must make quarterly estimated tax payments to avoid penalties.

2025 Payment Deadlines:

  • Q1 2025: April 15, 2025
  • Q2 2025: June 16, 2025
  • Q3 2025: September 15, 2025
  • Q4 2025: January 15, 2026

How to Pay:

  • IRS Direct Pay: Free electronic payment from your bank account at irs.gov/payments
  • EFTPS: Electronic Federal Tax Payment System for scheduled payments
  • Form 1040-ES: Mail a check with payment voucher

Deductions & Savings

Home Office Deduction Guide

If you use part of your home exclusively and regularly for business, you may qualify for the home office deduction.

Two Methods:

Simplified Method (Recommended):
  • • $5 per square foot of home office space
  • • Maximum 300 square feet ($1,500 max deduction)
  • • No depreciation or detailed records needed
Regular Method:
  • • Deduct actual expenses (mortgage interest, utilities, repairs, etc.)
  • • Based on percentage of home used for business
  • • Requires detailed records and Form 8829

Tax Planning Tips for Freelancers

  • Track Everything: Keep receipts and records for all business expenses throughout the year
  • Separate Accounts: Use a dedicated bank account and credit card for business expenses
  • Set Aside Money: Save 25-30% of your income for taxes in a separate account
  • Maximize Deductions: Common deductions include home office, equipment, software, professional development, and health insurance
  • Consider Retirement: SEP-IRA and Solo 401(k) contributions reduce your taxable income
  • Health Insurance: Self-employed health insurance premiums are 100% deductible
  • QBI Deduction: You may qualify for the 20% Qualified Business Income deduction
  • Hire a Professional: A CPA or tax professional can save you more than they cost

Mileage Tracking Guide for Self-Employed

Vehicle expenses are one of the most valuable deductions for self-employed individuals who drive for business. Proper mileage tracking can save you thousands in taxes.

2025 Standard Mileage Rate:

  • Business miles: $0.70 per mile (2025 IRS rate)
  • Medical/moving: $0.21 per mile
  • Charitable: $0.14 per mile

What Counts as Business Mileage?

  • ✅ Driving to meet clients or customers
  • ✅ Traveling between work locations
  • ✅ Running business-related errands (bank, post office, office supply store)
  • ✅ Attending business conferences or networking events
  • ✅ Picking up business supplies or equipment
  • ❌ Commuting from home to your primary workplace (not deductible)
  • ❌ Personal errands or side trips during business travel

How to Track Your Mileage:

  1. Record Every Trip: Log the date, starting location, destination, business purpose, and miles driven
  2. Use Technology: Apps like MileIQ, Everlance, or QuickBooks Self-Employed automate tracking
  3. Keep a Mileage Log: If tracking manually, maintain a written or spreadsheet log
  4. Document at Year Start/End: Record your odometer reading on January 1 and December 31
  5. Save Supporting Documents: Keep receipts for tolls, parking, and vehicle expenses

Standard vs. Actual Expense Method:

Standard Mileage Method (Easier):

  • • Deduct $0.70 per business mile driven
  • • Simple calculation: Total business miles × $0.70
  • • Can't deduct actual car expenses (gas, repairs, insurance)
  • • Best for: Most freelancers and side hustlers

Actual Expense Method (More Complex):

  • • Deduct actual costs: gas, oil, repairs, insurance, depreciation, lease payments
  • • Must track ALL vehicle expenses throughout the year
  • • Multiply total expenses by business use percentage
  • • Best for: High vehicle expenses or expensive vehicles

Required Records:

  • Date of trip
  • Starting point and destination
  • Business purpose (meeting with Client X, delivering documents to Y)
  • Miles driven
  • Total miles driven during the year (odometer readings)

⚠️ IRS Audit Tip: Mileage is one of the most audited deductions. Keep detailed, contemporaneous records (logged at the time of travel, not reconstructed later). The IRS may disallow your entire deduction if you can't provide adequate documentation.

Example Calculation:

Scenario: You drove 10,000 business miles in 2025
Deduction: 10,000 miles × $0.70 = $7,000
Tax Savings: At 25% tax rate = $1,750 saved

Official IRS Resources