A Complete Tax Checklist for US Freelancers and Gig Workers

Freelancing in the United States means becoming your own payroll department, bookkeeper and tax planner. The compliance load is manageable if you build a routine in your first year rather than reconstructing everything each April. This checklist follows the order the work actually happens in, from setting up accounts to filing the return.

Start by separating money. Open a dedicated business checking account and card, route every client payment into it, and pay every business expense from it. The separation is not a legal formality for a sole proprietor, but it turns bookkeeping into a matter of categorising a single statement and makes your deductions defensible if the IRS ever asks. Add a second savings account for tax reserves and move 25 to 30 per cent of each payment into it on the day it arrives.

Track income as it comes in rather than relying on 1099 forms. Payers only issue a 1099-NEC above a threshold, and payment platforms have their own rules for 1099-K reporting, so your own records are the authoritative figure. All business income is taxable whether or not a form arrives, and reporting less than the forms the IRS receives is the fastest way to generate a notice.

Know the deductions available to you. Software and subscriptions, professional development, a proportionate home office measured by square footage, business mileage at the standard rate, equipment, professional and liability insurance, contractor payments, bank and platform fees, advertising, and the business share of phone and internet all reduce profit before any tax is computed. Business meals are partly deductible and require a note of who you met and why. Commuting to a coworking space is not deductible; travel to a client in another city is.

Deduct health insurance separately. The self-employed health insurance deduction covers premiums for you, your spouse and dependents, and it comes off income rather than sitting on Schedule C. If you are covered by a high-deductible plan, contribute to a health savings account for a deduction, untaxed growth and untaxed medical withdrawals.

Pay quarterly. Estimated tax covers both income tax and the 15.3 per cent self-employment tax and falls due on 15 April, 15 June, 15 September and 15 January. The safe harbour of paying 100 per cent of last year's tax — 110 per cent if your prior-year AGI exceeded $150,000 — is the simplest way to avoid penalties when income is unpredictable. Pay online and keep the confirmations.

Use a retirement plan deliberately. A SEP-IRA is simple and allows up to a quarter of net earnings within the annual cap. A solo 401(k) usually permits more at moderate income and allows Roth deferrals, but generally must be established before year end. Either way, this is the largest single lever most profitable freelancers have, and it must be planned in December rather than April.

Keep records for at least three years from filing, and six where income may have been substantially understated. That means bank and card statements, invoices, receipts for anything significant, a mileage log with dates and purposes, home office measurements, and copies of every return and payment confirmation. Consider whether an LLC suits you for liability reasons — it changes nothing about your tax by default — and model an S corporation election only once profit is consistently high enough to justify the extra payroll and filing costs.