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Being self-employed comes with freedom but also financial responsibility, especially at tax time. If you earn money as a freelancer, contractor, gig worker, or run your own small business, the IRS considers you self-employed. That means you’re responsible for reporting your own income, paying self-employment taxes, and keeping detailed records.

The good news? The IRS allows a wide range of deductions to help reduce your taxable income. Knowing what you can (and can’t) write off can save you hundreds or even thousands of dollars.

Who Is Considered Self-Employed?

You’re self-employed if you:

  • Run a sole proprietorship or small business

  • Work as an independent contractor (receive 1099s)

  • Drive for Uber, deliver for DoorDash, or sell on Etsy

  • Do freelance work in design, consulting, coaching, etc.

  • Work gig jobs (task apps, tutoring, writing, etc.)

If no employer withholds taxes for you and you’re responsible for reporting your income then you are self-employed in the eyes of the IRS.

Self-employed individuals pay:

  • 15.3% self-employment tax

    • 12.4% for Social Security

    • 2.9% for Medicare

  • An extra 0.9% Medicare surtax applies to income over $200,000 (single) or $250,000 (joint)

Unlike W-2 workers, you pay both the employer and employee portion. However, you can deduct half of this tax when calculating your adjusted gross income (AGI).

Example:
You earned $50,000 from freelance work.
Your self-employment tax would be around $7,065.
You can deduct about $3,532 of that to lower your taxable income.

Most self-employed filers will use:

  • Schedule C (Profit or Loss from Business)

  • Schedule SE (Self-Employment Tax)

  • Form 1040 (main individual return)

If you have multiple income sources or platforms (e.g., Etsy, PayPal, Stripe), you may receive multiple 1099-NEC or 1099-K forms.

* Remember: Even if you don’t receive a 1099, you’re still required to report all income.

1. Home Office Deduction

If you use part of your home exclusively and regularly for your business, you may deduct:

  • A portion of rent or mortgage

  • Utilities

  • Property taxes

  • Repairs and maintenance

  • Internet service

Two methods:

  • Simplified: $5 per square foot (up to 300 sq. ft.)

  • Actual Expenses: Track and allocate based on percentage of home used

*Tip: Keep photos or layout of your space for documentation.

2. Business Mileage or Vehicle Use

You can deduct mileage for:

  • Client meetings

  • Deliveries

  • Business errands

  • Travel to/from a temporary work site

2025 mileage rate:
.67 cents per mile (IRS standard rate)

Alternatively, deduct actual costs:

  • Gas

  • Insurance

  • Repairs

  • Lease payments or depreciation

Track mileage using apps like MileIQ, Everlance, or a physical logbook.

3. Technology & Equipment

Deduct computers, phones, printers, and software used for business. You can:

  • Deduct the full cost (if under the Section 179 limit)

  • Or depreciate larger equipment over several years

Examples:

  • Laptops

  • Graphic design software

  • Business phone plan

  • Website hosting/domain fees

4. Supplies & Materials

Write off items used directly in your business, like:

  • Packaging and shipping materials

  • Office supplies

  • Craft or product materials

  • Business cards or promotional items

If it helps you produce, sell, or promote your service/product, it’s likely deductible.

5. Advertising & Marketing

Did you run Facebook or Google ads? Build a website? Hire a designer?

You can deduct:

  • Ad spend

  • Website costs

  • Email marketing services

  • Graphic design or photography fees

  • Printing flyers or brochures

6. Self-Employed Health Insurance

If you pay for your own health insurance, you can deduct:

  • Monthly premiums

  • Vision and dental coverage

  • Premiums for your spouse and dependents

This deduction reduces your AGI, even if you take the standard deduction.

7. Education & Training

Professional development is deductible if it improves your skills or business knowledge:

  • Online courses

  • Certifications

  • Workshops or webinars

  • Trade publications

  • Business books

*Tip: Keep receipts and course descriptions in case of audit.

8. Business Travel

Trips away from home for business purposes are deductible:

  • Airfare, bus, or train fare

  • Hotel stays

  • Rental cars or Uber/Lyft

  • 50% of meals while traveling

The trip must have a legitimate business purpose, and personal time must be clearly separated.

9. Phone & Internet

You can deduct a portion of your:

  • Cell phone bill

  • Internet service

  • Business app subscriptions (e.g., Canva, QuickBooks, Zoom)

Only the business-use portion qualifies, so track usage or estimate based on percentage.

10. Contractor or Freelancer Payments

Did you hire anyone to help with your business?

  • Virtual assistants

  • Subcontractors

  • Web designers

  • Accountants

You can deduct their fees. If you paid someone $600 or more, you must issue a 1099-NEC.

Not everything qualifies, even if it feels business-related:

  • Clothes (unless it’s a branded uniform or required protective gear)

  • Personal meals

  • Commute from home to regular work site

  • Entertainment (e.g., taking a client to a concert — no longer deductible)

Yes. While the IRS doesn’t require every receipt, you should maintain:

  • Digital or paper copies of receipts

  • Bank and credit card statements

  • Mileage logs

  • Spreadsheets or software records

Save records for at least 3 years (7 if you underreport income).

If you expect to owe more than $1,000 in tax for the year, you’re required to make quarterly estimated payments:

  • April 15

  • June 15

  • September 15

  • January 15 (next year)

Use Form 1040-ES to calculate and send payments. This helps avoid underpayment penalties.

Apps and software make tracking and filing easier:

  • QuickBooks Self-Employed (mileage + expense tracking)

  • Keeper Tax (automatic write-off discovery)

  • Wave (free accounting)

  • TurboTax Self-Employed or hire a tax pro for complex situations

  • Keeping detailed records

  • Separating business and personal finances

  • Making estimated payments

  • Using deductions strategically

Whether you’re a full-time business owner or part-time gig worker, staying informed and organized is your best strategy for tax season and your bottom line.

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