Our curated real estate agent tax deduction recommendations provide the insights your real estate business needs to reduce tax liability while maintaining compliance […]

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Lower Your Tax Bill with These 17 Deductions for Real Estate Agents

Because Zelle functions differently than payment apps like PayPal and Venmo, the platform is not responsible for sending you tax Form 1099-K, but that doesn't mean you're not responsible for reporting eligible income to the IRS […]

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Zelle Tax Reporting: Why It’s Not Like Other Payment Apps

Accurate business tax calculations are vital to your business's success. Keep reading to find out how to calculate your business taxes and stay in compliance […]

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How to Calculate Business Taxes: A Guide to Tax Liability in 2025

Hiring your first W-2 employee is a significant milestone for many small business owners. It acknowledges that your efforts are paying off and that you require additional support to meet your long-term business goals. It also means more work for you now that you'll be responsible for running payroll and handling associated taxes each pay period.An important aspect of <a href="https://1800accountant.com/blog/small-business-payroll">running payroll is the deductions you'll need</a> to make on your employees' behalf for tax purposes. Use this guide to learn what payroll deductions are and how you can make them for your employees.<h2>What are Payroll Deductions?</h2>Money withheld from your employees' paychecks <a href="https://1800accountant.com/blog/tax-deductions-work">is called a payroll deduction</a>. Some payroll deductions are mandatory, while others are only implemented with employee consent. Certain deductions are taken from wages pre-tax, while others are withheld from post-tax wages. Some of the most common deductions include income and Social Security tax withholdings. These withholdings are for W-2 employees only. If you use freelancers or contractors, it would not be your responsibility to handle taxes on their wages.&nbsp;&nbsp;<h2>8 Types of Payroll Deductions</h2><a href="https://1800accountant.com/blog/payroll-compliance-checklist">Use this guide to learn about different deductions</a> you can apply to your employee payroll. Remember that some are mandatory, while others are voluntary and can only be included with the consent of your employees.&nbsp;<h3>Pre-Tax Payroll Deductions</h3>Deductions you make on your employees' behalf before taxes are withheld <a href="https://1800accountant.com/blog/small-business-tax-deductions-checklist">are called pre-tax payroll deductions</a>. While there are limits on how much money your employees are allowed to contribute, they should seriously consider taking pre-tax deductions. Because the money is taken out before it is taxed, these deductions cost less than they would if they were considered post-tax deductions.<h4>401(k)</h4>If you offer an employer-sponsored retirement plan to employees, contributions to a 401 (k) plan qualify as a pre-tax deduction. Like other pre-tax deductions, the Internal Revenue Service (IRS) has a strict limit on the amount your employees can contribute to this plan annually.&nbsp;<h3>Post-Tax Payroll Deductions</h3>Deductions taken from <a href="https://1800accountant.com/blog/how-much-does-a-small-business-pay-in-taxes">your employees' pay</a> after all required taxes are withheld are called post-tax payroll deductions. Most post-tax deductions are entirely voluntary, with a few notable exceptions. Because the money is withheld after it is taxed, these deductions cost your employees more than they would if they were considered pre-tax deductions. And unlike pre-tax deductions, post-tax deductions will not lower an employee's annual tax burden.&nbsp;<h4>Wage Garnishment</h4>Charitable donations and retirement plan contributions are examples of voluntary post-tax payroll deductions. Wage garnishments, however, are post-tax deductions typically mandated by the courts, IRS, or other government agencies. The body or agency that has authorized the garnishment of your employee's wages will usually provide guidance in terms of the precise amount you must withhold. Wage garnishments can go toward fulfilling your employee's unpaid tax bill, alimony, and child support.&nbsp;<h3>Statutory Payroll Deductions</h3>You will also be responsible for withholding money that goes toward programs and services that benefit the public. These are called statutory payroll deductions and are typically mandated by government agencies to be withheld. Statutory payroll deduction withholdings will go toward federal and state income taxes and FICA, the Federal Insurance Contributions Act.&nbsp;<h4>FICA Deductions</h4>FICA payroll deductions go toward Social Security and Medicare. The Social Security tax rate for W-2 employees is 6.2% and 1.45% for Medicare. Employers must match those contributions, bringing the total contribution to 15.3%.You will not be responsible for making this contribution if you use freelancers or contractors. Instead, freelance or contract workers must pay the entire 15.3% from their income, which is called a self-employment tax.&nbsp;<h4>Federal Income Taxes</h4>You must also withhold federal income taxes for your employees. Federal income tax withholdings depend on your employees' income and filing status. Income will fall in one of the seven tax brackets, while information regarding filing status can be found on each employee's respective IRS Form W-4.&nbsp;&nbsp;<h4>State and Local Taxes</h4>Federal income tax withholding rules for payroll are fairly consistent wherever you operate in the country. That isn't true of state and local taxes, which can be more onerous in certain areas and friendlier in others. You must determine the appropriate amount of state and local taxes you must withhold from your employee's pay based on current rules and laws. If you're having difficulty making that determination, consult with members of your state and local governments or schedule time to speak with a payroll professional.&nbsp;<h3>Voluntary Payroll Deductions</h3>Some payroll deductions are mandatory, while others are voluntary. Employees can take voluntary payroll deductions on a pre-tax or post-tax basis or none at all. <a href="https://1800accountant.com/blog/payroll-debit-cards">If they opt to take voluntary deductions</a>, ensure they are clearly displayed each pay period.&nbsp;<h3>Insurance</h3>Most Americans receive healthcare through an employer, and the employer and employees commonly contribute to the cost of insurance premiums. If you offer health insurance to your employees, premiums can be paid on a pre-tax basis.&nbsp;<h3>Retirement Plans</h3>Retirement plan contributions can be made on a pre-tax and post-tax basis, depending on the option your employees choose. For example, contributions to a 401(k) can be made on a pre-tax basis, while Roth IRA contributions are made post-tax.&nbsp;<h2>Calculating Payroll Deductions</h2>Calculating <a href="https://1800accountant.com/blog/9-things-small-business-owners-forget-to-claim-on-their-taxes">payroll deductions each pay period</a> can be a time-consuming and detail-oriented process. If you're handling payroll yourself, <a href="https://1800accountant.com/blog/calculate-small-business-taxes">here's what to do</a>. <a href="https://www.investopedia.com/terms/p/payroll.asp">First, adjust each employee's gross pay</a> by withholding voluntary deductions they've made, if any. Next, you will calculate their federal income tax deduction. <a href="https://www.business.com/tools/payroll-deductions-calculator/">Then, you will withhold</a> the 7.65% for Medicare and Social Security, which you will also match. You must address applicable state and local income taxes and then subtract post-tax deductions to determine each employee's net pay for the period.&nbsp;&nbsp;&nbsp;<h2>Reporting Payroll Deductions</h2>You must report payroll deductions and make payments to the federal government. <a href="https://1800accountant.com/blog/make-payroll-more-efficient">Check with your state and local governments</a> for any filing requirements they may have associated with payroll deductions.Use IRS Form 940, IRS Form 941, and IRS Form 944 to submit payroll materials and payments to the government.&nbsp;<h2>Payroll Made Easy: Let 1-800Accountant’s Experts Handle It</h2>Understanding how these deductions apply is essential when handling employee payroll. These insights will help make the challenging, time-consuming process of running payroll each pay period a little easier. However, if you find that running payroll yourself has taken away from more pressing business matters, consider outsourcing. <a href="https://1800accountant.com/services/payroll">When you outsource your payroll to 1-800Accountant</a>, America's leading virtual accounting firm, our payroll experts handle payroll and <a href="https://1800accountant.com/blog/payroll-tax-returns">associated tax filings for you</a>. This frees you to focus on your next business milestone while we handle your employee pay. Schedule a quick consultation—usually 30 minutes or less—to learn how we can help your business flourish with payroll and other essential, tax-deductible financial services.&nbsp;

An important aspect of running payroll is the deductions you'll need to make on your employees' behalf for tax purposes. Use this guide to learn what payroll deductions are and how you can make them for your employees […]

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Payroll Deductions: What Are They and How to Make Them

Payroll Deductions: What are They and How to Make Them

You’re likely familiar with some self-employed tax deductions, but this article will help prepare you for tax time […]

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19+ Commonly Missed Tax Deductions for Self-Employed People

19+ Commonly Missed Freelancer Tax Deductions

You may be eligible for more tax write-offs than you expect. Keep reading to learn who can claim the self-employment tax credit […]

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Self-Employment Tax Credit: What It Is + Can You Claim It?

Working for yourself can be exhilarating. You’re your own boss, and you can work wherever and whenever you want. The downside to your independence? Self-employed, freelance tax rules. Unlike employees who earn a paycheck, freelancers must calculate and pay quarterly taxes, among other business responsibilities.The income tax filing process differs for self-employed individuals from that of traditional employees. Freelancers must follow complicated rules and often file additional forms. This article explains what you should know about preparing and filing your freelance taxes for 2026.<h2>Freelancer Tax Key Takeaways</h2><ul><li>Learn about the tax thresholds for filing income tax as a freelancer</li><li>Identify additional taxes freelancers and independent contractors must file</li><li>Understand when your freelance taxes are due&nbsp;</li></ul><h2>Learn about Freelance Tax Laws</h2>As a freelancer or independent contractor, you should have a solid grasp of the tax rules and laws that impact your operations. We’ll cover some basics in this article. You can find numerous resources via the Internal Revenue Service (IRS)<a href="https://www.irs.gov/businesses/small-businesses-self-employed">&nbsp;small business and self-employed tax center</a>, which provides information for all business types.&nbsp;<h2>Understand Your Business Structure</h2>The tax forms and rates you'll need depend on your business entity type. When you operate as a freelancer, your business defaults to a sole proprietorship unless you establish a legal entity for your freelance work. Other common legal entity types include the following:<ul><li>Limited Liability Company (LLC):<ul><li>Single-member LLCs owned by individuals default to sole proprietorships.&nbsp;</li><li>LLCs can elect to be treated as partnerships or C corporations for income tax purposes.</li></ul></li><li>C corporation</li><li>S corporation</li><li>Partnership</li></ul>Selecting the optimal business structure will impact your tax liability. Each business structure should comply with the relevant tax rules. We recommend<a href="https://1800accountant.com/services/industry/freelancer-self-employed">&nbsp;consulting tax professionals</a>&nbsp;to determine the right entity type for your freelance business.<h2>Gather Your Business Information and Documents</h2>You will receive income from multiple sources due to your freelance and independent contract work –&nbsp;<a href="https://1800accountant.com/blog/types-of-1099-tax-forms">bank account transfers, electronic payments, or paper checks – all of which require diligent</a><a href="http://tracking.us">&nbsp;tracking. US</a><a href="https://1800accountant.com/blog/1040-vs-1099">&nbsp;businesses must submit</a>&nbsp;IRS Form 1099-NEC, Nonemployee Compensation, to report payments of $600 or more to freelancers and independent contractors. You should receive a Form 1099-NEC from US corporations and partnerships no later than January 31 of the following year. However, businesses that paid you less than $600, private individuals, and non-US businesses might not send you documentation. You should keep track of all payment sources and methods during the year, regardless of source, as the IRS expects you to pay taxes on eligible income. To determine your business income and expenses, gather the following records:&nbsp;<ul><li><a href="https://1800accountant.com/blog/how-much-to-set-aside-for-1099-taxes">IRS Forms 1099-NEC</a>&nbsp;(you can receive multiple forms from different sources)</li><li>Bank statements and savings account records</li><li>Online payment accounts, such as PayPal</li></ul>Keeping accurate, up-to-date records of freelance income while tracking other important metrics can be challenging and time-consuming. Save time using full-service<a href="https://1800accountant.com/services/bookkeeping">&nbsp;outsourced bookkeeping from 1-800Accountant</a>&nbsp;to maintain your freelance business records.<h2>How Do You Report Freelance Income? Find Your Tax Forms</h2><h3>IRS Form 1040 Schedule C</h3>Sole proprietors and single-member LLCs should report their business income and tax deductions on&nbsp;<a href="https://1800accountant.com/blog/understanding-the-schedule-c-tax-form">Schedule C (Form 1040), Profit or Loss from Business (Sole Proprietorship)</a>. Review the<a href="https://www.irs.gov/instructions/i1040sc">&nbsp;Schedule C instructions</a>&nbsp;to prepare the form. Enter your business information, then report your earnings and expenses on the relevant lines. Total your income and subtract deductions to compute your net&nbsp;<a href="https://www.irs.gov/pub/irs-pdf/i1040c.pdf">profit or loss from your freelance business</a>.&nbsp;<a href="https://1800accountant.com/blog/how-to-fill-out-form-1040">Report the total profit or loss on</a>&nbsp;IRS Form 1040, U.S. Individual Income Tax Return. If your net profit is at least $400, you should also complete Schedule SE (Form 1040), Self-Employment Tax.<h3>IRS Form 1040 Schedule SE</h3>Schedule SE calculates the tax you owe on your self-employment income. Freelancers with at least $400 net profit on Schedule C should complete Schedule SE. Report your self-employment tax on Form 1040.<h3>IRS Forms 1120, 1120-S, and 1065</h3><a href="https://1800accountant.com/blog/what-is-form-1065">Corporate and partnership</a>&nbsp;freelance businesses&nbsp;<a href="https://1800accountant.com/blog/1120-tax-form">should report their income on&nbsp;</a>their business tax returns rather than on Form 1040 Schedule C. We recommend partnering with<a href="https://1800accountant.com/services/industry/freelancer-self-employed">&nbsp;self-employment tax professionals</a>&nbsp;to calculate and file your freelance business taxes, especially as they become more complex.&nbsp;<h2>When Do Freelancers Pay Taxes? Deadlines for Returns and Quarterly Estimates</h2>Refer to the following due dates and note the filing deadlines for returns and estimates. Block some time on your calendar to gather information and file it timely. 2026 tax return filing deadlines:<ul><li>March 16: IRS Form 1120-S, U.S. Income Tax Return for an S Corporation, and IRS Form 1065, U.S. Return of Partnership Income&nbsp;</li><li>April 15: IRS Form 1040 and IRS Form 1120, U.S. Corporation Income Tax Return&nbsp;</li></ul>Do you need more time to file your return? You can submit a six-month extension. Be sure to pay what you think you’ll owe, or you could face penalties for failure to pay by the deadline. If you follow a fiscal tax year, different dates may apply. Check with a tax professional to find the right due dates for your business. The IRS also expects businesses to pay estimated taxes as they earn income. Since full-time freelancers and independent contractors do not receive paychecks and do not have taxes withheld each pay cycle, they should make quarterly tax payments. The IRS imposes penalties and interest for failure to pay your taxes on time. We recommend monitoring your receipts and expenses throughout the year to avoid surprises. Quarterly payments are due by the 15th day of&nbsp;<ul><li>April</li><li>June</li><li>September</li><li>January&nbsp;</li></ul><h2>How Much Do Freelancers Pay in Taxes? Calculate Your Taxes</h2>Freelancers and independent contractors must pay both income tax and self-employment tax.&nbsp;<a href="https://www.irs.gov/newsroom/irs-releases-tax-inflation-adjustments-for-tax-year-2026-including-amendments-from-the-one-big-beautiful-bill">The IRS updates individual income tax brackets annually</a>. Refer to the following table for 2026 income tax rates.<table><colgroup data-width='500'><col style="width:17.5896%"/><col style="width:82.4104%"/></colgroup><tbody><tr><td>2026 Tax Rate</td><td>Income</td></tr><tr><td>37%</td><td>For incomes greater than $640,600 ($768,700 for married couples filing jointly)</td></tr><tr><td>35%</td><td>For incomes over $256,225 ($512,450 for married couples filing jointly)</td></tr><tr><td>32%</td><td>For incomes over $201,775 ($403,550 for married couples filing jointly)</td></tr><tr><td>24%</td><td>For incomes over $105,700 ($211,400 for married couples filing jointly)</td></tr><tr><td>22%</td><td>For incomes over $50,400 ($100,800 for married couples filing jointly)</td></tr><tr><td>12%</td><td>For incomes over $12,400 ($24,800 for married couples filing jointly)</td></tr><tr><td>10%</td><td>For incomes of $12,400 or less ($24,800 for married couples filing jointly)</td></tr></tbody></table>Remember, many states and cities impose income taxes. Check your local tax rules to stay compliant.<h3>What is the self-employment tax?</h3>In addition to income tax, freelancers pay self-employment tax of 15.3% (regardless of their income tax bracket). Self-employment tax represents 12.4% of Social Security and 2.9% of Medicare taxes.&nbsp;<a href="https://1800accountant.com/blog/self-employment-tax-2">Why do freelancers pay self-employment tax</a>? Consider a traditional employee who receives a bi-weekly paycheck: The employer withholds Social Security (6.2%) and Medicare (1.45%) taxes from the employee each pay cycle. The employer pays an equal portion. The employee and employer split the 15.3% of Social Security and Medicare taxes on the employee’s wages. In contrast, self-employed individuals must pay both the employer’s and the employee’s share of Medicare and Social Security taxes. Fortunately, freelancers can take business expense deductions, which helps reduce taxable self-employment income.<h3>Claim your freelancer tax deductions</h3>Think through your business-related spending. Many of your freelance business expenses qualify as tax deductions, which reduce your taxable income and overall tax bill. How do you know if you can deduct an expense? Qualified business tax deductions are ordinary (i.e., not excessive) and necessary for running the business. You must retain supporting documentation associated with each deduction you intend to claim. Common business tax deductions you should consider taking include the following:<ul><li>Advertising</li><li>Business equipment and supplies</li><li>Depreciation</li><li>Home office deduction</li><li>Legal fees</li><li>Training and education</li><li>Travel and business meals</li></ul>Track your spending throughout the year by monitoring your bank statements and credit card bills. Effortlessly keep your financial materials organized and up to date with<a href="https://1800accountant.com/services/bookkeeping">&nbsp;full-service bookkeeping from 1-800Accountant</a>.&nbsp;<h2>Understand State and Local Tax Rules</h2>The business structure you select to be taxed as and other factors will dictate whether you'll be responsible for paying state and local business taxes. Review the following information to determine whether state and local taxes apply to your freelance operations. If you still have questions, consult with a CPA regarding paying taxes to state and local authorities on your net earnings or annual income, among other helpful taxpayer insights to maximize your tax refund.<h4>State income taxes</h4>Whether your business is taxed as a corporation, LLC, or sole proprietorship, you may have to pay state taxes depending on the region. Employment and income taxes are among the most common state and local taxes business owners must pay. Employment taxes include:<ul><li>Temporary disability insurance</li><li>Unemployment insurance taxes</li><li>Workers' compensation insurance</li></ul><h4>Property taxes</h4>If you own your offices or the property on which you conduct business, you must pay property taxes to local tax officials. In some cases, only the real estate in which your business operates is taxed. In other cases, the real estate and property used by your business are taxed. This is usually in the city or county where you conduct business. The tax itself is based on assessed value. You will receive information about the assessed value of your property annually. If you disagree with the assessed value, many localities will allow you to submit an appeal. &nbsp;<h4>Sales tax</h4>Typically, small business owners must pay and report state sales taxes to businesses they work with that operate in states with state income taxes. In most states, business owners collect sales tax and pay it to the state Department of Revenue. Online business owners may also be responsible for paying sales tax for certain types of sellers.<h2>File Your Freelancer Taxes</h2>LLCs that are pass-through entities have no separate federal tax filing requirements, so the IRS does not recognize them as a business category that must file taxes. This means every freelance LLC can effectively choose which federal income tax approach to follow.&nbsp;<a href="https://1800accountant.com/blog/tax-strategies-self-employed-v-small-business-owners">LLCs can use IRS Form 8832, Entity Classification Election</a>, to elect to be classified as a sole proprietorship, partnership, S corporation, or C corporation (this entity lacks pass-through taxation and is taxed twice). Regardless of entity type, you can submit your tax forms electronically and file your annual tax return via<a href="https://www.irs.gov/filing/irs-free-file-do-your-taxes-for-free">&nbsp;IRS Free File</a>&nbsp;or<a href="https://www.irs.gov/filing/where-to-file-paper-tax-returns-with-or-without-a-payment">&nbsp;traditional mail</a>.<h2>Simplify Your Freelance Tax Preparation</h2>Taxes are complex. We understand self-employment taxes can feel like the least of your concerns when you have a business to run. That's where 1-800Accountant, America's leading virtual accounting firm, and our team of tax professionals can support all your self-employment and income tax needs. We’ll help you monitor your income and maximize your deductions year-round.Don’t risk forgetting to file. Schedule a free consultation for assistance with<a href="https://1800accountant.com/services/industry/freelancer-self-employed">&nbsp;tax preparation for freelancers &amp; self-employed entrepreneurs</a>.

Working for yourself feels exhilarating. You’re your boss. You can work wherever (and whenever) you want. The downside to your independence? Freelance taxes.&nbsp; Freelancers and independent contractors enjoy autonomy and the added responsibility of self-employment tax rules. Unlike employees who earn a paycheck, freelancers must calculate and pay quarterly taxes. The income tax filing process [&hellip;]

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Taxes for Freelancers: What the Self-Employed Need to Know

If you handle your business's financial work, you must know the forms you'll be responsible for preparing and filing. Whether you're experienced or new to the process, avoiding mistakes and filing on time is imperative […]

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LLC Tax Filing: What Documents and IRS Forms Do You Need

Use this simple, easy-to-understand guide to learn the fundamentals regarding your ongoing real estate tax responsibilities […]

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Real Estate Accounting: A Simple Guide for Your Complex Business

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