For starters, you'll probably start getting one or all of these tax forms in the mail:
Form 1099-MISC or 1099-NEC reports money you earned doing work for a client or for a company as a non-employee. Think of it as the self-employed equivalent of Form W-2. If someone paid you more than $600 for non-employee work in 2020, they're required to send you a 1099-MISC or 1099-NEC.
Form 1099-K is generated when you earned over $20,000 or received over 200 transactions from a company. This form is sent to contractors who work for on-demand companies like Uber and Lyft.
Please note that you're required to report all self-employed income – including cash, check, and electronic payments – even if it's under $600 or you didn't get a 1099.
As a self-employed taxpayer, you're also going to start seeing some new forms on your tax return (don't worry – we'll automatically fill these out for you as you proceed through the TurboTax interview):
- Schedule C: This calculates your net profit or loss, which carries over to Schedule 1, line 3.
- Schedule SE: This calculates your self-employment tax, which shows up on Schedule 2, line 4. You get to deduct half of it; that amount transfers over to Schedule 1, line 14.
- 1040-ES: We'll generate 4 of these estimated payment vouchers, one for each quarter, if (like many newly self-employed people) you didn't withhold or pay enough taxes throughout the year. These vouchers are for next year's return. More info