5 Tax Strategies That Could Save Freelancers Hundreds in 2026

Freelancers, 1099 contractors and gig workers look unsocial challenges erstwhile it comes to taxes: itemizing each concern expenses, covering their ain Social Security and Medicare taxes and a deficiency of an leader to withhold taxes. That past 1 catches a batch of first-year freelancers off-guard, starring to a large taxation measure successful April.

“A batch of radical deliberation if they made little than $14,600, which is the modular deduction for azygous filers, they don’t person to pay,” said Bill Park, laminitis of TaxHakr.

But, according to the IRS, anyone with nett net (after subtracting concern expenses) of $400 oregon much is liable for self-employment taxes.

Fortunately, with immoderate beforehand planning, freelancers tin little their taxation measure and prevention hundreds of dollars.

Under the Tax Cuts and Jobs Act (TCJA) of 2017, concern owners, including sole proprietors, tin constitute disconnected 20% of their concern income done the Qualified Business Income (QBI) deduction. This is simply a below-the-line deduction, truthful it doesn’t trim your Adjusted Gross Income (AGI) oregon impact your taxation bracket, but it tin trim the magnitude you beryllium the IRS.

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Freelancers are liable for paying the afloat 15.3% of Social Security and Medicare (FICA) taxes, portion W-2 employees divided the outgo with their employer. By structuring your concern arsenic an S-Corp, you lone wage FICA taxes connected the information of profits you instrumentality arsenic a salary.

“You wage yourself a [reasonable] wage and that’s wherever the taxation payment comes in,” Park said.

He suggested that freelancers who person earned astir $30,000 to $40,000 for the twelvemonth should see speaking to a nonrecreational astir filing arsenic an S-corp the pursuing year, particularly if they expect their concern to proceed growing.

It’s important for freelancers to see status savings, particularly since they don’t person an leader matching their contributions. Opening a SEP-IRA oregon solo 401(k) program reduces your taxation liability, since you tin deduct the contributions.

A wellness savings relationship has aggregate benefits for freelancers. “If you [shop] the security marketplace, take a wellness security program that’s HSA-qualified,” Park said.

Your contributions to the program go top-line deductions to trim your taxation liability and let you to wage for aesculapian costs with what are, essentially, pre-tax dollars.

Freelancers person entree to galore business-related deductions that W-2 employees can’t constitute off, including location bureau expenses, selling costs and mileage. But maintaining cautious records is key. Park recommended mounting up a daily, play oregon monthly accounting process truthful you’re not relying connected representation erstwhile you record taxes.