Taxes for a freelancer can be quite challenging but it doesn’t have to be that way. While taxes for em[loyees are pretty self-explanatory, freelancers have multiple sources that report their income. An employee receives Form W-2 from their employer. This is not the case with a freelancer as they rather their own boss and don’t have an employer.
The way freelancers report taxes is more simple than what you might think. Freelancers report taxes by receiving certain tax forms from their clients. When businesses pay freelancers or independent contractors, they must file and furnish the recipient with 1099. It’s either 1099-MISC or 1099-NEC. Upon receiving this tax form, there is no difference in how to report taxes. The 1099s show the income earned and income taxes withheld from the payment.
The total amount of income you earned should be reported with the 1099s. Simply add the total amount earned and reported with 1099s and you’ll get to your gross income. If there are other income earned that weren’t reported with Forms 1099, use Schedule 1 to report the additional income earned.
How to report taxes using 1099s?
Forms 1099 are information returns, so they are basically tax forms that need to be attached to the corresponding tax return. Take the tax forms you were furnished with and attach them to your federal income tax return. You need to physically attach tax forms if you’re filing a paper tax return. Those who are filing an electronic return don’t need to do anything about the attachments as these are handled by the tax preparation software.