Five IRS tax forms for self-employed individuals
What tax forms do you need to file your self-employment taxes?
At a glance:
In addition to the usual Form 1040, if you are self-employed, you will likely need certain schedules, like Schedule C or Schedule SE.
Use any 1099-NEC forms you receive to accurately report your self employment income.
- Form 8829 can help you figure out the home office deduction, if applicable.
- But which tax forms do you need to file your self-employment taxes?
- At a glance:
In addition to the usual Form 1040, if you are self-employed, you will likely need to attach certain schedules, like Schedule C or Schedule SE.
Use any 1099-NEC forms you receive to accurately report your self-employment income.
Form 8829 can help you figure out the home office deduction, if applicable.
Here are five Internal Revenue Service (IRS) self-employed tax forms and information that might be relevant to your tax situation.
1. Form 1040 (U.S.) Individual Tax Return
Most U.S. taxpayers use Form 1040, even if they are not self-employed. This form has different sections that allow you to report your income or claim tax deductions. Whether or not you owe taxes, you might qualify for certain tax credits.
Certain types of income or deductions may require you to attach additional schedules. If you decide to itemize deductions rather than take the standard deduction, then you will need to attach Schedule A to your Form 1040. Schedule C to Form 1040, Profit or Loss From Business (Sole Proprietorship)
Speaking of schedules, one you’ll probably need to become familiar with as a self-employed taxpayer is Schedule C. If you are a sole proprietor, this is an essential form for you. Since sole proprietors take all business profits as personal income, you use Schedule C to report all income and expenses from your business to determine your profit or loss.
- Schedule C consists of two sections:Income:
- Starting with income, record all payments you received from your clients. You might have different amounts of gross receipts or sales, gross profit, and gross income.Expenses:
Schedule C organizes your expense amounts into numerous line items. For example, auto, advertising, depreciation, and supply expenses are all recorded in separate categories.
Although you don’t have to fill out a separate IRS tax form for business use of your car, it makes sense to understand what you can claim for Schedule C. You can only deduct all expenses for operating your car if you use it exclusively for your business. You must keep detailed records of the miles you drive both for business and for personal use. Form 1099-NEC, Nonemployee Compensation
After the end of the year, each client should give you a Form 1099-NEC, Nonemployee Compensation for the total they paid you that year if it exceeded the baseline amount specified by the IRS (currently $600). Form 1099-NEC, Nonemployee Compensation
After the end of the year, each of your clients should give you a Form 1099-NEC, Nonemployee Compensation, for the total they paid you that year if it exceeded the baseline amount that the IRS specifies (currently $600).
Compare every Form 1099-NEC you receive to your records to make sure the amounts are consistent. You want to avoid any discrepancies if your clients claim they paid you more money than they actually did. Form 8829 – Expenses of Home Office Use
You may be able claim certain expenses if you use your home for business purposes. In order to do so, your home office must meet the following criteria:
- It must be your principal place of business or a place of business where you meet with patients, clients, or customers.
- This area of your home must be used exclusively for business purposes.
If you determine part of your home is regularly used as your principal place of business, you can calculate the actual expenses of your home office using Form 8829. Mortgage interest, utilities, insurance and repairs are all deductible expenses. You can’t deduct all of these costs, but you can deduct a percentage of the cost. For instance, if you use 15% of your home exclusively for business, you will be able to deduct 15% of your home expenses as part of this business deduction.
However, if crunching those exact percentages sounds like a hassle, a quicker way to calculate your expenses is to use the simplified method, where you simply deduct a flat rate per square foot. The qualification requirements are the same, but the process of figuring out the deduction and your recordkeeping obligations may be more straightforward.
Fortunately, TaxAct(r) makes it easy by doing those calculations for you — all you have to do is answer a few interview questions.
5. Schedule SE (Form 104), Self-Employment tax
In many cases, self employed people who earn at least $400 of net self employment income are required to pay self employment tax (SE tax). Schedule SE can be filed with Form 1040. The SE tax is calculated at 15.3% of your income and includes your Social Security and Medicare. Schedule SE will help you calculate this deduction and direct you to enter it on your Form 1040.
The bottom line
Always check that the IRS tax forms for the year are correct. The bottom line
Always make sure you have the correct IRS tax forms and instructions for the current year. The forms might change, so you don’t want to use a piece of outdated information.
