Your 1099 Income
Total deductible expenses: supplies, software, home office, mileage, etc.
Your 1099 Tax Breakdown
Understanding Taxes on 1099 Income
When you receive a 1099-NEC or 1099-K form, it means the income reported on it hasn't had any taxes withheld. As a freelancer or independent contractor, you owe two types of tax on this income: federal income tax and self-employment tax.
Your effective tax rate on 1099 income is almost always higher than what a W-2 employee pays on the same amount, because you're covering both the employer and employee portions of Social Security and Medicare. Use our Self-Employment Tax Calculator to see that breakdown in detail.
Reducing Your 1099 Tax Bill
The best way to reduce your tax liability is to track every legitimate business expense. Common deductions for freelancers include the home office deduction, mileage deduction, software subscriptions, professional development, health insurance premiums, and retirement contributions (SEP IRA or Solo 401k). Read our guide on 10 tax deductions every freelancer should know.
Paying Taxes on 1099 Income
Since no taxes are withheld, you're required to make estimated quarterly tax payments if you expect to owe $1,000 or more. This avoids underpayment penalties and spreads the financial burden across the year.