How to File Taxes as a Freelance Writer (And Stay Sane While Doing It!)

The gig economy, also known as access economy or sharing economy, has changed the way Americans earn a living. Gig workers, among which are freelance writers at WriterAccess, provide goods and/or services on demand. Just as gig work has transformed the way business is handled today, it has also impacted the way taxes are paid. You need to know how to file taxes as a freelance writer if you want to survive tax season this year.

As freelancers, we don’t usually get a W-2 like we did when we were traditionally employed. Instead, we obtain a 1099-MISC form and are expected to pay quarterly estimated taxes. This changes the tax game significantly and can be a bit problematic if you aren’t prepared for what’s coming.

How to File Taxes as a Freelance Writer

If you want to survive tax season with your sanity intact, you’ll need to learn how to file taxes as a freelance writer. Below, I’ve put together a list of some of the most important things you need to know before filing your taxes this April.

Who has to file a 1099-MISC?

According to federal tax law, all companies have to provide workers who earn over $600 through their organization with a 1099-MISC form at the end of the calendar year.

However, some digital platforms differ a bit. According to Caroline Bruckner, who is the director of the Kogod Tax Policy Center, digital platforms work a little differently. Tax rules do not require digital platforms who process payments for sellers and provide service through digital platforms to adhere to this rule. They are allowed to opt out of providing a 1099-MISC, unless a worker has either garnered $20,000 in payments or has made 200 transactions on their platform.

However, just because a company isn’t required to provide a worker with documentation showing their income, doesn’t mean that the worker is allowed to forego paying taxes. This means that you should be tracking your income throughout the year to ensure that you account for all income on your taxes, even if you are not provided with a MISC-1099.

Paying Quarterly Taxes as a Freelancer

As freelancers, we often have to estimate our own taxes and make quarterly payments to the government. If you do not pay quarterly taxes, you will have to pay a year’s worth during tax season. Not to mention, you may also have to pay a penalty for not filing quarterly.

The burden of keeping up with quarterly taxes falls on the freelancer, not the company with which they work. Remember, as freelancers, we aren’t employees per se, but contract workers.

I experienced this newfound responsibility firsthand after becoming a freelancer almost a decade ago. My first year as a freelance writer, owing the government didn’t come back to bite me as my income wasn’t that significant. By the second year, when tax season came around, I was in for a rude awakening. Take my advice, and pay your quarterly taxes! It makes life so much easier.

How to Know What You Owe

If you aren’t sure how much you should send the Internal Revenue Service, my advice is to work with a good accountant to help you figure it out. My accountant prints out slips for me to send in my estimated taxes, which he determines for me based on the previous year’s earnings. He also gives me addressed envelopes, making it super easy to pay what I owe. (If only he provided the money to pay what I owe…)

Keep in mind, if you file married jointly with your spouse, this could affect the amount of money you owe. Some freelance writers on the WriterAccess platform have altered their spouse’s withholdings to make up for what they are not paying in estimated taxes, which helps them come out even by the end of the year.

If you aren’t a tax pro and you’re not sure how to estimate payments, hiring a good accountant can be well worth the investment, at least until you get the hang of it yourself. If you want to try your hand at it, the IRS’s site provides forms that allow you to enter your previous year’s income information to determine your new year’s estimated tax amount.

What is Self-Employment Tax?

According to the tax professional mentioned above, Bruckner, any gig worker who makes more than $400 a year owes the government self-employment tax. This goes above and beyond income tax. It means you pay the Medicare and Social Security withholdings that would have been withheld by your employer if you were traditionally employed. It is this self-employment tax that usually causes issues for gig workers, not their income tax.

The Future of Freelancer Taxes & What to do Now

Hopefully, with more people embracing gig work, tax laws will change to make the process of paying estimated and self-employment taxes easier. In the meantime, Buckner recommends all gig workers keep exhaustive records of both your income and any applicable expenses. (Remember expenses can include anything that is vital to your job, even the cost of internet.)  She also recommends visiting the IRS site to determine what you might owe and how to pay estimated taxes, ensuring you are in good standing come April 15^th.

Good luck this tax season!