Are You Self-Employed? What It Means for Your Taxes (and How to Save More)
Introduction
If you work for yourself, you might have wondered: Am I considered self-employed in the eyes of the IRS?
The answer matters — because it determines how you report income, pay taxes, and claim deductions.
At Deductions & Co., we help entrepreneurs, freelancers, and small business owners navigate the unique tax rules of self-employment. Here’s a breakdown — straight from IRS Publication 334 — of what it really means and how to make it work in your favor.
👩💻 Who the IRS Considers Self-Employed
According to the IRS, you’re self-employed if any of the following apply:
✅ You carry on a trade or business as a sole proprietor or independent contractor.
Example: You run a consulting firm, cleaning service, or freelance design business.
✅ You are a member of a partnership that operates a trade or business.
Example: You co-own a marketing agency structured as a partnership.
✅ You’re in business for yourself — even part-time.
Example: You drive for rideshare apps, sell products online, or do weekend photography gigs.
💡 Note: Even side-hustle income counts as self-employment — and must be reported.
💰 What Being Self-Employed Means for Taxes
Unlike traditional employees, self-employed individuals don’t have taxes withheld automatically. Instead, you’re responsible for three main filings:
1️⃣ Schedule C (Form 1040) – to report your business income and expenses.
2️⃣ Self-Employment (SE) Tax – covering your Social Security and Medicare contributions.
3️⃣ Quarterly Estimated Tax Payments – because no employer is withholding taxes for you.
💡 Tip: Set aside about 25–30 % of each payment you receive for taxes. That ensures you’ll have funds ready when quarterly payments are due (April 15, June 15, September 15, and January 15).
🌟 Why It Matters
Being self-employed gives you flexibility and independence — but it also brings new responsibilities.
The upside? You gain access to a long list of valuable deductions that can dramatically reduce your taxable income, including:
🏠 Home-office expenses
🚗 Vehicle mileage & travel costs
💻 Supplies, software, and tools
📚 Professional and legal services
💵 Retirement plan contributions (SEP IRA, Solo 401(k))
With a solid plan, these deductions can help you keep more of what you earn and reinvest it in your business.
⚠️ Common Misunderstanding
Many people assume you must own a large company to be considered self-employed.
That’s not true.
If you earn income outside traditional employment, whether consulting, freelancing, or running an online shop, the IRS likely views you as self-employed.
💬 In short: If you send invoices instead of receiving pay stubs — you’re probably self-employed.
✅ The Bottom Line
If you’re making money on your own terms, chances are you’re self-employed — and that means it’s time to think differently about your taxes.
At Deductions & Co., we help independent professionals:
Stay compliant with IRS rules
Avoid underpayment penalties
Maximize every available deduction
📅 Ready to Clarify Your Status?
Wondering whether you fall into the self-employed category — or how to handle your taxes the right way?
👉 Schedule Your Free Consultation with Deductions & Co. today, and let’s make sure your taxes work as hard as you do.
