• The forms: Schedule C and Schedule SE
  • Self-employment tax

As a US freelancer working as a sole proprietor, you report your business income and expenses on Schedule C, pay self-employment tax (Social Security and Medicare) on your net earnings using Schedule SE, and pay income tax on your taxable income. IRS Publication 15 (2026) tells US payers that for someone who isn't an employee, "don't withhold federal income tax from their pay, unless backup withholding applies," and that payers "must generally withhold 24% of certain taxable payments if the payee fails to furnish you with their correct TIN." So client payments arrive without federal income tax withheld unless backup withholding applies, and you may need to pay estimated tax during the year. Clients and payment apps may send you Forms 1099-NEC or 1099-K, but you report your income whether or not you get one.

Billed publishes this page. Every rule below is US federal and is quoted from IRS pages, forms and publications opened on October 29, 2026: Self-employment tax, About Schedule C, About Schedule SE, Schedule SE (Form 1040) 2025, Estimated taxes, Form 1040-ES (2026), Publication 15 (2026), the Instructions for Forms 1099-MISC and 1099-NEC (Rev. December 2026) and Understanding your Form 1099-K. It doesn't cover state or local taxes. This is general information, not tax advice; ask your accountant about your situation.

The forms: Schedule C and Schedule SE

  • Schedule C: "Use Schedule C (Form 1040) to report income or loss from a business you operated or a profession you practiced as a sole proprietor."
  • Schedule SE: "Use Schedule SE (Form 1040) to figure the tax due on net earnings from self-employment."

Both attach to your Form 1040. If you work through a partnership or a corporation instead, the forms are different; ask your accountant.

Self-employment tax

The IRS: "The self-employment tax rate is 15.3%. The rate consists of two parts: 12.4% for social security (old-age, survivors, and disability insurance) and 2.9% for Medicare (hospital insurance)."

Who pays it. "You must pay self-employment tax and file Schedule SE (Form 1040) if either of the following applies." The first condition: "Your net earnings from self-employment (excluding church employee income) were $400 or more."

How it's figured. Schedule SE (2025) starts from your net profit, then says: "multiply line 3 by 92.35% (0.9235)". The 12.4% Social Security part applies only up to a yearly maximum; for 2025, line 7 of Schedule SE gives the maximum as $176,100 of combined wages and self-employment earnings. The 2.9% Medicare part applies to all of it.

The deduction. "You can deduct the employer-equivalent portion of your self-employment tax in figuring your adjusted gross income. This deduction only affects your income tax. It does not affect either your net earnings from self-employment or your self-employment tax." On Schedule SE (2025), line 13 is the "Deduction for one-half of self-employment tax."

Worked example: self-employment tax on Schedule SE (2025)

The business and figures here are a sample, invented for this example. It uses the 2025 Schedule SE lines and assumes the freelancer had no wages from a job and only one business.

  • Net profit from Schedule C: $60,000.
  • Line 4a, net earnings: $60,000 × 92.35% = $55,410.00.
  • Social Security part (line 10): $55,410.00 is below the $176,100 maximum, so $55,410.00 × 12.4% = $6,870.84.
  • Medicare part (line 11): $55,410.00 × 2.9% = $1,606.89.
  • Self-employment tax (line 12): $6,870.84 + $1,606.89 = $8,477.73.
  • Deduction for one-half (line 13): $8,477.73 × 50% = $4,238.87 (rounded to the cent).

As a check, $55,410.00 × 15.3% = $8,477.73, the same total. Income tax is figured separately on the 1040 and depends on your other income and deductions, so it isn't shown here; ask your accountant.

Estimated tax and the 2026 due dates

Who pays it. The IRS: "Individuals, including sole proprietors, partners, and S corporation shareholders, generally have to make estimated tax payments if they expect to owe tax of $1,000 or more when their return is filed."

Due dates for 2026. Form 1040-ES (2026) says: "You can pay all of your estimated tax by April 15, 2026, or in four equal amounts by the dates shown below."

  • 1st payment: April 15, 2026
  • 2nd payment: June 15, 2026
  • 3rd payment: September 15, 2026
  • 4th payment: January 15, 2027

For the fourth payment, Form 1040-ES adds: "You don't have to make the payment due January 15, 2027, if you file your 2026 tax return by February 1, 2027, and pay the entire balance due with your return."

Weekends and holidays. "If the due date for an estimated tax payment falls on a Saturday, Sunday, or legal holiday, the payment will be on time if you make it on the next day that isn't a Saturday, Sunday or holiday."

Penalties. "If you don't pay enough tax by the due date of each of the payment periods, you may be charged a penalty even if you are due a refund when you file your income tax return." How much to pay each period depends on your income and past tax; ask your accountant.

Forms 1099-NEC and 1099-K

Form 1099-NEC (from clients). Publication 15 (2026) gives the threshold for payers: "you must file Form 1099-NEC, Nonemployee Compensation, to report payments of $600 or more made in 2025 ($2,000 or more for payments made in 2026) to persons not treated as employees (for example, independent contractors) for services performed for your trade or business." The 1099-NEC instructions add that the $2,000 threshold "may be adjusted for inflation beginning in calendar year 2027."

Form 1099-K (from payment apps and marketplaces). "A payment app or online marketplace is required to send you a Form 1099-K if the payments you received for goods or services total over $20,000 in more than 200 transactions. However, they may send you a Form 1099-K with lower amounts and/or transactions."

Report your income either way. The IRS: "Whether or not you receive a Form 1099-K, you must still report any income on your tax return." Compare any 1099 you receive with your own invoice records.

Records and deductions

Keep records of what you invoiced, what you were paid and what you spent, with receipts. For possible deductions, see tax deductions for freelancers, the tax deductible business expenses checklist and how to claim home office expenses. For more on the self-employment tax itself, see what is self-employment tax.

Where Billed fits

Billed publishes this page. Its expense tracking page says: "Give every expense a category so your spending is already sorted when you file taxes or hand the year to your accountant." It also says reports "can be filtered by date range and exported for your accountant, bookkeeper or tax software." Its invoice software page says "Invoice reports show which invoices are paid, partially paid or past due", which gives you an invoice record to compare with any 1099. For hourly work, time tracking records the hours you bill. Filing your return is something you do yourself or with your accountant. See pricing and Billed's tools.

When this guide isn't for you

This page covers US federal basics for freelancers working as sole proprietors. It doesn't cover state or local taxes, partnerships, S corporations, employees, or income from outside the US. Ask your accountant about those.

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Frequently Asked Questions

What is the self-employment tax rate?

The IRS says: "The self-employment tax rate is 15.3%." That's 12.4% for Social Security and 2.9% for Medicare. On Schedule SE you apply it to 92.35% of your net profit, and the Social Security part stops at a yearly maximum ($176,100 for 2025).

When are 2026 estimated tax payments due?

Form 1040-ES (2026) lists April 15, 2026, June 15, 2026, September 15, 2026 and January 15, 2027. When a due date is a weekend or legal holiday, the payment is on time on the next business day.

Do I have to pay estimated tax?

The IRS says individuals, including sole proprietors, "generally have to make estimated tax payments if they expect to owe tax of $1,000 or more when their return is filed." Ask your accountant how much to pay each period.

What is the 1099-NEC threshold for 2026?

IRS Publication 15 (2026) says payers file Form 1099-NEC for payments of $2,000 or more made in 2026 to independent contractors, up from $600 for 2025. You report your income whether or not you receive one.

Which forms does a freelancer file?

A sole proprietor reports business income or loss on Schedule C and figures self-employment tax on Schedule SE, both with Form 1040. Estimated tax payments use Form 1040-ES.

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