No Result
View All Result
SUBMIT YOUR ARTICLES
  • Login
Sunday, October 26, 2025
TheAdviserMagazine.com
  • Home
  • Financial Planning
    • Financial Planning
    • Personal Finance
  • Market Research
    • Business
    • Investing
    • Money
    • Economy
    • Markets
    • Stocks
    • Trading
  • 401k Plans
  • College
  • IRS & Taxes
  • Estate Plans
  • Social Security
  • Medicare
  • Legal
  • Home
  • Financial Planning
    • Financial Planning
    • Personal Finance
  • Market Research
    • Business
    • Investing
    • Money
    • Economy
    • Markets
    • Stocks
    • Trading
  • 401k Plans
  • College
  • IRS & Taxes
  • Estate Plans
  • Social Security
  • Medicare
  • Legal
No Result
View All Result
TheAdviserMagazine.com
No Result
View All Result
Home IRS & Taxes

How Do I Know If I’m Self-Employed

by TheAdviserMagazine
2 months ago
in IRS & Taxes
Reading Time: 4 mins read
A A
How Do I Know If I’m Self-Employed
Share on FacebookShare on TwitterShare on LInkedIn


Updated for tax year 2025.

If you’re a freelancer, it’s critical to know whether you’re self-employed or an employee, as the distinction significantly affects your tax responsibilities. Let’s review some of the differences and how to tell which category you fall under if you’re unsure.

At a glance:

Being self-employed means managing your taxes yourself; unlike traditional employees, you’re accountable for paying income taxes, Medicare, and Social Security taxes.

While traditional employers issue W-2 forms for incomes above $600, freelancers receive Form 1099-NEC from clients for projects over $600 (in 2025).

Categories of self-employed workers

Generally, the Internal Revenue Service (IRS) considers you to be self-employed if you fall into any of the following categories of individuals who carry on a trade or business:

Sole proprietor: A “solo” is one person who owns an unincorporated business.

Limited liability company (LLC): An LLC combines some tax advantages of a corporation and a partnership. An LLC can consist of a sole member or multiple members.

Independent contractor: Generally, you might be an independent contractor if you have the power to decide when, where, and how you work on a specific project. If you fall into this category, you might also refer to yourself as a freelancer.

Member of a partnership: A partnership comprises at least two people engaged in a business who share the profits and losses from that business.

Self-employed on a part-time basis

It’s important to understand you don’t have to work full-time in your business venture to be classified as self-employed. You might work for one employer, but you’re also self-employed, performing tasks or services for several freelance clients.

For example, you could be a project manager at a traditional 9-to-5 job with a side gig as a consultant or caretaker.

Why it matters whether you’re self-employed

If you’re self-employed, your tax position vastly differs from a traditional employee’s. The major distinction? Self-employed individuals are responsible for paying their own taxes.

If you’re traditionally employed or considered a household employee, your employer must withhold income tax and amounts for Medicare and Social Security from your paycheck. They are responsible for reporting and remitting those dollars to the tax authorities.

But when you work for yourself, those company responsibilities are now your own.

Tax reporting

When you work for a traditional employer, they mail a Form W-2, Wage, and Tax Statement, to any employee who earned at least $600 in wages at the end of the year. Household employees like nannies or cleaners have a slightly different threshold — your employer must give you a W-2 and withhold taxes if you earned at least $2,800 as a household employee in 2025 (up from $2,700 in 2024). For more information on the nanny tax, check out Nanny taxes: A complete guide from care.com.

However, when you freelance, the situation is a bit different. A freelance client sends Form 1099-NEC, Nonemployee Compensation, to any freelancer they paid at least $600 for a dedicated project or service. This $600 threshold will increase to $2,000 starting in tax year 2026 due to a provision in the One Big Beautiful Bill Act.

Additionally, if you were paid via a payment card or third-party payment company (e.g., PayPal®, Stripe®, Square®) for at least $20,000 and had at least 200 transactions, you should receive a Form 1099-K, Payment Card and Third Party Network Transactions, from each entity that met those thresholds. For example, if you had at least 200 transactions and at least $20,000 of payments in both PayPal and Square in 2025, you would receive two different 1099-K forms detailing your transactions — one from PayPal and one from Square.

Self-employed tax responsibilities

If you’re self-employed, you’re required to pay the IRS (and possibly state taxing authorities) directly; you don’t have an employer to take care of it for you.

In addition, you may be required to pay your taxes every quarter rather than annually on the mid-April filing date. That’s because the IRS expects you to pay the taxes you owe as you earn the money, like you would if you were an employee who has taxes withheld from each paycheck.

Whenever you start working on a project, it’s important to immediately determine how you should be classified in that particular work situation. If you’re self-employed, make sure you promptly pay your taxes to avoid any penalties or headaches later.

As a business owner, paying your taxes on time will help you avoid stressful tax audits and instead allow you to concentrate on what matters — growing your business.

This article is for informational purposes only and not legal or financial advice.

TaxAct, Inc. gets fees from some third parties that provide offers to its customers. This compensation may affect what and how we communicate their services to you.  TaxAct is not a party to any transactions you may choose to enter into with Care.com, does not itself offer legal or financial advice, and disclaims any liability arising out of such transactions. Please see care.com for their terms and conditions.

Care.com name and logo are registered trademarks of care.com and are used here with care.com’s permission.



Source link

Tags: SelfEmployed
ShareTweetShare
Previous Post

Autodesk (ADSK) set to report Q2 FY26 earnings. Here’s what to expect

Next Post

Dollar Moves Lower with T-Note Yields

Related Posts

edit post
Churches, Families, and Private Inurement – Houston Tax Attorneys

Churches, Families, and Private Inurement – Houston Tax Attorneys

by TheAdviserMagazine
October 25, 2025
0

When you earn a dollar, you pay income tax and probably paid payroll or self-employment tax on it. When you...

edit post
6 strategic steps to increase technology agility in indirect tax

6 strategic steps to increase technology agility in indirect tax

by TheAdviserMagazine
October 24, 2025
0

Indirect tax is one of the largest, least visible cash flows in a global enterprise. Cashflow often represents 10% or...

edit post
Do I Count Utilities on My Taxes?

Do I Count Utilities on My Taxes?

by TheAdviserMagazine
October 24, 2025
0

In certain instances, utility costs can turn into a tax deduction when filing your tax return. Let’s take a look...

edit post
How the ExO framework, AI, and IP can transform CPA firms

How the ExO framework, AI, and IP can transform CPA firms

by TheAdviserMagazine
October 24, 2025
0

The Exponential Organization (ExO) framework, combined with AI and intellectual property, empowers CPA firms to deliver ten times more value...

edit post
Personal Property Tax Exemption Measure

Personal Property Tax Exemption Measure

by TheAdviserMagazine
October 23, 2025
0

Property tax relief is on the minds of lawmakers and taxpayers around the nation.  Frequently, reducing the residential property taxA...

edit post
7 Red Flags the IRS Spots Fast |

7 Red Flags the IRS Spots Fast |

by TheAdviserMagazine
October 23, 2025
0

Why Does Bookkeeping Matter So Much for Landlords? For real estate investors, bookkeeping is more than tracking numbers—it’s about protecting...

Next Post
edit post
Dollar Moves Lower with T-Note Yields

Dollar Moves Lower with T-Note Yields

edit post
Goldman Sachs: Stablecoins Could Unlock Trillions in Market Potential

Goldman Sachs: Stablecoins Could Unlock Trillions in Market Potential

  • Trending
  • Comments
  • Latest
edit post
77-year-old popular furniture retailer closes store locations

77-year-old popular furniture retailer closes store locations

October 18, 2025
edit post
Pennsylvania House of Representatives Rejects Update to Child Custody Laws

Pennsylvania House of Representatives Rejects Update to Child Custody Laws

October 7, 2025
edit post
What to Do When a Loved One Dies in North Carolina

What to Do When a Loved One Dies in North Carolina

October 8, 2025
edit post
Another Violent Outburst – Democrats Inciting Civil Unrest

Another Violent Outburst – Democrats Inciting Civil Unrest

October 24, 2025
edit post
Probate vs. Non-Probate Assets: What’s the Difference?

Probate vs. Non-Probate Assets: What’s the Difference?

October 17, 2025
edit post
California Attorney Pleads Guilty For Role In 2M Ponzi Scheme

California Attorney Pleads Guilty For Role In $912M Ponzi Scheme

October 15, 2025
edit post
HSBC to recognize .1 billion in provision after court ruling in Madoff case

HSBC to recognize $1.1 billion in provision after court ruling in Madoff case

0
edit post
Global central banks cut US T-bill exposure, increase gold reserves

Global central banks cut US T-bill exposure, increase gold reserves

0
edit post
High Dividend 50: Ellington Financial Inc.

High Dividend 50: Ellington Financial Inc.

0
edit post
As Pentagon Takes Secretive Donation for Military Salaries, AFL-CIO Says Pay All Workers Impacted by Shutdown

As Pentagon Takes Secretive Donation for Military Salaries, AFL-CIO Says Pay All Workers Impacted by Shutdown

0
edit post
US And China Signal Progress In Kuala Lumpur; Crypto Traders Take Notice

US And China Signal Progress In Kuala Lumpur; Crypto Traders Take Notice

0
edit post
Eight Important Success Habits I Learned From My Five-Year Rich Habits Study

Eight Important Success Habits I Learned From My Five-Year Rich Habits Study

0
edit post
HSBC to recognize .1 billion in provision after court ruling in Madoff case

HSBC to recognize $1.1 billion in provision after court ruling in Madoff case

October 26, 2025
edit post
What Saudi Arabia and Bangladesh can teach Silicon Valley

What Saudi Arabia and Bangladesh can teach Silicon Valley

October 26, 2025
edit post
US And China Signal Progress In Kuala Lumpur; Crypto Traders Take Notice

US And China Signal Progress In Kuala Lumpur; Crypto Traders Take Notice

October 26, 2025
edit post
Here are the major earnings before the open Monday

Here are the major earnings before the open Monday

October 26, 2025
edit post
49-year-old favorite pizza chain files for Chapter 11 bankruptcy

49-year-old favorite pizza chain files for Chapter 11 bankruptcy

October 26, 2025
edit post
SharpLink Gaming Withdraws M Ethereum, Boosts Supercycle

SharpLink Gaming Withdraws $78M Ethereum, Boosts Supercycle

October 26, 2025
The Adviser Magazine

The first and only national digital and print magazine that connects individuals, families, and businesses to Fee-Only financial advisers, accountants, attorneys and college guidance counselors.

CATEGORIES

  • 401k Plans
  • Business
  • College
  • Cryptocurrency
  • Economy
  • Estate Plans
  • Financial Planning
  • Investing
  • IRS & Taxes
  • Legal
  • Market Analysis
  • Markets
  • Medicare
  • Money
  • Personal Finance
  • Social Security
  • Startups
  • Stock Market
  • Trading

LATEST UPDATES

  • HSBC to recognize $1.1 billion in provision after court ruling in Madoff case
  • What Saudi Arabia and Bangladesh can teach Silicon Valley
  • US And China Signal Progress In Kuala Lumpur; Crypto Traders Take Notice
  • Our Great Privacy Policy
  • Terms of Use, Legal Notices & Disclosures
  • Contact us
  • About Us

© Copyright 2024 All Rights Reserved
See articles for original source and related links to external sites.

Welcome Back!

Login to your account below

Forgotten Password?

Retrieve your password

Please enter your username or email address to reset your password.

Log In
No Result
View All Result
  • Home
  • Financial Planning
    • Financial Planning
    • Personal Finance
  • Market Research
    • Business
    • Investing
    • Money
    • Economy
    • Markets
    • Stocks
    • Trading
  • 401k Plans
  • College
  • IRS & Taxes
  • Estate Plans
  • Social Security
  • Medicare
  • Legal

© Copyright 2024 All Rights Reserved
See articles for original source and related links to external sites.