What’s the Minimum I Have to Make as a Freelancer to File Income Tax

Did you know that freelance workers currently make up 36% of the US workforce? That equates to approximately 59 million Americans, and that number is likely to reach 90 million by 2028.

Numerous Americans are adding freelance work to boost their income or replace their traditional nine to five jobs entirely. However, even if you don’t receive a W-2 from an employer, you still have to file taxes

So, what is the minimum amount you have to make as a freelancer to file income taxes? Today, we’re answering that question and providing some tips to make tax time less stressful for you as a freelancer.

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Minimum Income Tax Rates

In the US, if your gross income meets these thresholds, you need to file a federal income tax return:

  • Single: $12,200
  • Married and Filing Separately: $12,200
  • Married and Filing Jointly: $24,400

However, this does not mean that you don’t have to file taxes on freelance income if you don’t meet these thresholds. 

Self-employed individuals have to pay self-employment taxes in addition to income tax. The self-employment tax rate is 15.3%, and the minimum you have to earn before filing taxes is only $400. 

Freelance Taxes and Schedule C

To calculate if you’ve earned enough freelance income to pay self-employment taxes, you’ll want to file a Schedule C form along with your 1040 income tax return.

Schedule C documents your small business expenses, gross income, gross profit, and your net profit (or net loss). If your net profit is equal to or less than $400, you’ll need to pay the self-employment tax. 

Lowering Your Taxable Income

As a freelancer, you have to pay for your own business expenses, and this means you can write off these expenses on your taxes. Here are some of the items you can deduct from your tax liability:

  • Dedicated home office space
  • Business travel expenses
  • Business-related dining
  • Certifications or education within your field
  • Business supplies and equipment

An excellent rule of thumb is that if you cannot perform your job without that item, it is likely to be a deductible expense. To make record keeping easier, be sure to keep your business and personal expenditures separate.

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Tracking Your Freelance Income

Because you’re working for yourself and no longer receiving a W-2, you’ll need to have a method for showing proof of income. This is especially important if you are applying for a loan or a lease.

You can show proof of income with invoices or bank statements, but there is a much easier method you can use. If you use an online paystub maker, you’ll have straightforward documentation of your income each month.

This is particularly critical in the case of applying for a loan because a paystub will show your pre-tax income before you’ve reduced your tax liability with your business deductions. 

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File Taxes With Confidence

The minimum you need to earn as a freelancer to file taxes is only $400. However, keep in mind that you can lower your tax liability by maintaining detailed records of your business expenses.

If you’d like to learn more about running a small business before you take the leap into freelancing, be sure to check out our sections on small business and entrepreneurship.