Tax Planning Checklist for Freelancers

Disclaimer: This is general information, not tax or legal advice. For guidance tailored to your situation, consult a qualified tax professional.

Intro — why planning matters

Freelancers don’t have payroll withholding, so taxes must be planned and paid throughout the year. Good planning prevents underpayment penalties, smooths cash flow, and saves time at tax season. The IRS recommends self-employed taxpayers learn estimated-tax rules and keep good records. IRS

Core checklist (what every freelancer should do)

1) Decide how much to set aside

A practical rule: set aside about 25–35% of each invoice to cover federal income tax plus self-employment tax. That percentage depends on your expenses, state tax, and marginal bracket, but it’s a safe starting point to avoid surprises. The self-employment tax (Social Security + Medicare) is generally about 15.3% on net earnings. apps.irs.gov+1

2) Pay quarterly estimated taxes when required

If you expect to owe $1,000 or more at filing, make quarterly estimated tax payments using Form 1040-ES. Due dates generally fall in April, June, September and January of the following year — missing them can trigger penalties. Use the IRS worksheets or your accounting tool to pace payments. IRS+1

3) Keep clean books (every month)

Track invoices, payments, and expenses in a cloud accounting tool (QuickBooks, Xero, FreshBooks) or a disciplined spreadsheet. Reconcile monthly so you always know net profit and the tax you'll owe. Good books make quarterly projections accurate and tax prep painless. IRS

4) Capture the deductions freelancers miss

Common deductible items: home-office (simplified or actual method), equipment & software, marketing, education, subscriptions, and business meals (partial limits apply). The IRS offers a simplified home-office option at $5 per square foot up to 300 sq ft. Keep receipts and simple logs. IRS+1

5) Track mileage or actual auto expenses

Record business miles (apps like MileIQ or Everlance help). Decide whether to use the standard mileage rate or actual expenses — choose the method that yields the bigger deduction but document it carefully. IRS

6) Save for self-employment tax

Remember: you pay both the employer and employee portions of Social Security and Medicare. Set aside part of your net so you can cover roughly 15.3% of net self-employment earnings (adjusted for small exceptions and thresholds). apps.irs.gov

7) Pick a retirement vehicle that reduces taxes

Freelancers commonly use SEP IRAs or Solo (one-participant) 401(k)s; both lower taxable income and help build retirement savings. Contribution limits and exact calculations vary — check IRS guidance to choose what fits your income. IRS+1

8) Mind state & sales tax rules

If you live or sell into states with income or sales tax, register and comply. Nexus rules vary widely — check state tax sites or ask a pro if you have out-of-state clients. IRS

A simple 30-day action plan

1. Open a separate “tax” savings account and transfer 25–35% of your last 2–4 invoices.
2. Set up bookkeeping or a clean spreadsheet and enter the last 3 months of transactions.
3. Track mileage for 30 days (app or logbook).
4. Run a quick tax projection and, if needed, make your next estimated payment with Form 1040-ES. IRS
5. Decide on a retirement account (SEP or Solo 401(k)) and open it if you plan to contribute this year. IRS

When to call a pro

Hire a CPA or enrolled agent if you have: multi-state work, high income swings, plan to elect S-Corp status, or face IRS notices. A good pro often pays for themselves by finding deductible expenses and preventing costly mistakes.