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How does being self-employed affect my taxes?

SOLVEDby TurboTax655Updated February 02, 2024

For starters, you'll probably receive some different 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 $600 or more for non-employee work, they're required to send you a 1099-NEC.

Form 1099-K tracks income you receive, usually through credit cards or processors like PayPal, Venmo, Square, Etsy, Uber, or Ebay, for selling goods or providing services.

You should receive a 1099-K if you made over $20,000 from more than 200 transactions.

You're required to report all self-employed income – including cash, check, and electronic payments – even if you didn't get a 1099.

As a self-employed taxpayer, you'll also see some new forms on your tax return. We'll automatically fill these out for you in TurboTax.

  • 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 15.
  • 1040-ES: We'll generate four 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, in case you need them.

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