Being self-employed has many perks, but it also comes with tax-related questions. If you’re working for yourself, you probably have a few burning questions about taxes. It’s important to understand how taxes work for self-employed individuals to avoid surprises. Here are the top 5 tax questions most self-employed people ask.
1. Do I Have to Pay Taxes If I’m Self-Employed?
Yes, you do. When you’re self-employed, you must pay income tax and self-employment tax. The self-employment tax covers your Social Security and Medicare contributions. Unlike employees who have taxes withheld from their paychecks, you must make estimated quarterly tax payments throughout the year. These payments help you avoid a large tax bill when you file your return.

You also need to track your income carefully. The IRS expects you to report all earnings, whether paid in cash or check. Keep records of your work, such as receipts, invoices, and bank statements.
2. What Deductions Can I Claim as a Self-Employed Worker?
As a self-employed individual, you can deduct several business expenses from your taxable income, which helps reduce the taxes you owe. Some common deductions include:
Home Office Expenses: If you use part of your home for business, you can deduct a portion of your rent, utilities, and other home-related costs.
Business Supplies: Deduct the cost of any supplies or equipment you buy for your business, like computers or office supplies.
Travel Expenses: Deduct the cost of transportation, lodging, and meals if you travel for work.
Health Insurance Premiums: If you pay for your own health insurance, you can deduct your premiums.
Retirement Contributions: Deduct contributions to retirement plans like an IRA or Solo 401(k).
Tracking all your business-related expenses throughout the year makes tax season much easier and helps maximize your deductions.
3. How Do I File My Taxes as a Self-Employed Person?
Filing taxes as a self-employed person is different from filing as an employee. You must report all your income and deductions on Schedule C (Form 1040). This form helps you determine your net profit, which is what you will pay taxes on. You also need to file Schedule SE to calculate self-employment tax.

Keep your records of earnings, expenses, and deductions organized to make filing easier. If you’re unsure, consult with a tax professional who understands self-employment tax rules.
4. How Much Should I Set Aside for Taxes?
A common question for self-employed individuals is how much to set aside for taxes. It’s generally recommended to set aside 25-30% of your income for taxes. This amount covers both income tax and self-employment tax. However, the percentage can vary depending on your income level and allowable deductions. To avoid surprises, create a simple system for setting aside tax money.
5. What Happens If I Don’t Pay My Taxes on Time?
Failing to pay your taxes on time leads to penalties and interest charges. The IRS doesn’t take missed payments lightly, so you must file on time and pay what you owe. If you’re unable to pay the full amount, you can set up a payment plan with the IRS. This allows you to make monthly payments until you pay off your tax debt.

Keep in mind that you might qualify for tax credits or deductions that could lower the amount you owe. If you’re unsure how much to set aside, a tax professional can help you determine a good estimate.

Ready to get on top of your self-employment taxes? Our team at Bumgardner Morrison & Co LLP is here to provide personalized tax guidance to help you navigate the complexities of self-employment. Contact us today to learn how we can make tax season easier and make sure you’re on the right track!