The first 14 weeks of the year are known in the U.S. as tax season; the income tax filing deadline is April 15 of each year, with some variation if the fifteenth falls on a weekend.
Income tax is the amount you owe to the government based on your annual earnings minus tax deductions and credits. As an employee, payroll taxes are deducted from each paycheck automatically and remitted to the IRS, but you have to pay them yourself when you’re self-employed.
Your income tax rate is based on your tax bracket, which is determined by the total taxable income from employment, self-employment, investments, grants, sales of property, winnings, and certain benefits.
Freelance creatives are self-employed as sole proprietors or single-member limited liability companies (LLC). Because you’re self-employed, you’re required to make estimated tax payments every quarter on April 15, July 15, October 15, and January 15. Estimated payments are based on your anticipated income for the current year. You pay these installments using the IRS Form 1040-ES.
If you’ve opted to form an S Corp, your corporation is required to make estimated tax payments every quarter as well, and this is also done using the IRS Form 1040-ES.
If you’re a sole proprietor, you claim all the money you make through your business as personal income. You do this on a Schedule C — a supporting document included with your Form 1040 tax return — where you claim business-related expenses as tax deductions and pay income tax on your profits — your net income from your business.
If your business is structured as an LLC (limited liability company), you are not considered the same as your business, but you choose how you are taxed — as either a sole proprietor or as a corporation.
If your business is structured as an S Corp, it is taxed as a separate entity. You’ll submit tax returns for your business and personal returns for yourself. The business is responsible for payroll taxes, and you take a salary if you work in the business.
Whenever you have questions about forms, what’s deductible, and how to prepare your tax return, consult an accountant, tax preparer or tax attorney. I am not a financial pro and don’t offer legal or financial advice. I offer this information for educational purposes only
Self-Employment Tax
When you’re self-employed, you are, in the eyes of the IRS, both an employer and employee. That means you’re responsible to pay both the employer’s and employee’s contributions to Social Security and Medicare. That’s always been the case.
The good news is that as of 2018, the employer’s portion is deductible as a business expense on the Schedule C. You’ll end up paying only half of the total you owe for Social Security and Medicare because you’ll deduct that share as a business expense.
You will still deduct business and art supply expenses, business use of your home and car, advertising and marketing, fees paid to independent contractors and suppliers, and a portion of your health insurance premiums. Also as of 2018 you are no longer penalized if you haven’t purchased health insurance, but be aware that your state may impose its own penalties.
Be sure to record your professional development and educational expenses. Anything you spend on schooling, online courses, continuing education, seminars, conferences, etc., is deductible on your Schedule C.
Qualified Business Income
The One Big Beautiful Bill Act (OBBBA) of 2025 made the Qualified Business Income (QBI) deduction permanent. This means you may deduct a percentage of your QBI if you’re a sole proprietor, LLC or S corporation. Be sure to consult with a qualified tax or accounting pro regarding applying the QBI to your business.
Standard Deduction Increase
The standard deduction on your personal income tax Form 1040 has increased (due to the OBBBA) for 2025 to $15,750 if you’re single and $31,500 for married couples filing jointly. Seniors age 65 and above can add an additional $6,000 deduction, and single seniors and heads of households may deduct an additional $2,000 beyond that. These additional amounts are currently set to expire in 2028, but may be made permanent.
The Nothing Owed, Nothing Paid Principle
Since I’ve been self-employed, which is since I entered the design profession, my goal has been to not owe any taxes nor receive a refund. I’ve not always been successful with this tactic, but it’s still my goal. I don’t want to either under pay or over pay income taxes.
Here’s my reasoning: By overpaying taxes so that you receive a tax refund, you’re loaning the government your money without receiving interest on it. That extra money you’re paying means you don’t have it on hand to work with when you need it, and may need to resort to taking out loans or acquiring credit card debt.
If you underpay your taxes, you’ll end up paying more than you’re obligation because of added penalties and interest.
The best approach, in my thinking, is to pay quarterly installments of the right amount so that the amount of tax you owe and the amount of refund due on your annual returns cancel each other out to zero.
Quarterly Estimated Payments
If you’re employed, your employer deducts tax obligations from each paycheck. Self-employed people don’t get paychecks. So instead we make estimated tax payments four times a year in April, June, September and January. What you pay in these installments is based on your expected total income for that year.
Quarterly estimated payments are not tax filings. When you prepare and file your tax return, you’ll include amounts of estimated payments subtracted from your total tax obligation. What you pay when you file or what is refunded, depends on the quarterly installments you paid throughout the year.
To make the payments, you’ll submit a Form 1040-ES along with your payment.
If you make quarterly estimated payments, you’ll pay less or nothing when you file your tax return. YOu might also receive a refund. If you don’t make quarterly estimated payments, you may owe additional amounts in penalties and interest. Do all you can to avoid that scenario.
Get Wise About Money
Money is a tool. The less of it you have, the less you’re able to conduct business. Learn what you need to know so that you can make wise decisions and accurate calculations.
One of the biggest business-killers for indy creatives is debt. Debt makes you a slave to your creditors. Interest charges are extra money going out of your pockets into someone else’s. That’s not good for your business or your life. Here are some tips for wise money management:
Create and follow a spending plan, otherwise known as a budget. We talk about this in my Business Road Map program where I guide you through the budgeting process. When you plan your spending you’re in control of your money. Budgeting does not mean you can’t use your money. It means you are in charge of how you use it.
Establish values and policies around how you will handle money and funding. For example, you can have a policy about shopping necessary equipment and considering refurbished items. Refurbs will be less costly than new, out of the box options. Write these policies down and include them in your business plan.
Avoid using credit cards and taking out loans. If you use a credit card, pay it off before interest is charged.
Avoid leasing equipment. Leasing is similar to renting in that you’re paying to use and are responsible for something you don’t own. Compare ownership costs to leasing costs. Whether it’s cars or computers, ownership is always the more prudent way to go.
Save for big-ticket items. Do all you can to put money aside weekly or monthly for big expenses like upgrading your 2009-vintage Mac Pro to a sleek, round canister version or an upgradable iMac.
Invest in your retirement. Set aside money regularly for your later years. Mutual funds are worthy candidates over bonds and annuities.
Be generous. Make giving and tithing part of your money management. No one who’s generous will tell you they went broke because of it. Just the opposite, they’ll tell you that they’ve received more. Generosity opens doors. It works like planting seeds. When you plant one, it yields a bunch more seeds.
Tax laws will shift as corrections and changes are made so it’s worth it to stay informed and be watchful. Paying less in taxes, staying out of debt and stewarding your money and business policies can combine into a thriving business and prosperous life. All in all, owing income tax is a sign that your freelance business is profitable.
—
DISCLAIMER: I am not an attorney or CPA. This information is offered in good faith for general information purposes only and is not exhaustive. It is not intended as legal advice or opinion. I do not make any warranty about the completeness, reliability, or accuracy of this information. Any action you take based upon this information is strictly at your own risk. I am not liable for losses and damages in connection with the use of this information. You should seek legal and other professional advice when establishing or conducting a freelance business.
