Can I Claim Tax if My Freelance Job Is Not Registered?

By Business & Finance Last updated Wednesday, January/15/2025

1099-MISC Income

If you do more than $600 worth of work for a client, that client should issue you a 1099-MISC form that shows exactly how much you were paid. If you do not receive all your 1099-MISC forms by the end of February, you should contact the clients and request replacement copies. You are required to report all of the income you made from freelancing, whether or not you crossed that $600 threshold. As a freelancer, you need to keep meticulous records of the money you made, and you must report that amount to the IRS.

As a freelancer, you are subject to the self-employment tax, and it is important to factor that additional taxation into your planning and budgeting. When you work a freelance job, the IRS considers you to be both the employer and the employee. What that means from a tax perspective is that you must pay both the employer and the employee side of the Social Security and Medicare tax. Those combined taxes make up the self-employment tax. You are required to pay this tax on the money you make from your freelance business, even if your business is not officially registered.

If you expect to owe more than $1,000 to the IRS as a result of your freelancing, you may be required to make estimated quarterly tax payments to the IRS instead of simply filing once a year. If you feel this may apply to you, it is important to consult a tax professional or accountant. If you have a small amount of freelance income and a full-time job, you can fill out a new W-4 and increase the amount withheld from your paycheck. That allows you to take care of the extra taxes on an ongoing basis, and it relieves you from the burden of making quarterly payments to the IRS.

When you do freelance work, you are in business for yourself, regardless of whether that business is actually registered. That means tax planning is very important, and that tax planning should take place throughout the year. Keeping track of how much you have made from your freelance endeavors makes it easier to plan for taxes, and to put money aside in retirement plans and other shelters that can help lower your tax bill.