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Do Freelance Graphic Design? Learn How to Report Your Income

The gig economy is growing. 40 percent of American workers are likely to be independent contractors by 2020.


Well, that doesn’t mean you’re beyond Uncle Sam’s reach when you begin doing freelance graphic design. As a freelancer, you need to file your tax returns just like a regular employee.


In this post, we’re going to guide you on what to do. Read on to learn more.

Independent Contractor Tax Laws

If you’re just starting out in freelance graphic design, it helps to understand independent contractor tax laws.


Essentially, you’re considered self-employed. In this case, you’re required to file tax returns every year and pay estimated tax quarterly. You have to pay self-employment tax (SE tax) and income tax.


SE tax is a Medicare and Social Security tax for the self-employed. The tax is usually 15.3 percent of your income.


However, before paying the SE tax, you need to determine your net loss or net profit. Just subtract your expenses from your income to result. If your expenses are more than your income (net loss), you don’t need to pay it.


If your net profit is $400 or more, you have to file income tax return. For more information, it helps to understand Form 1040.

Gather All the Relevant Details

If you work for multiple clients or companies, take the time to gather and report all sources of your freelance income. They will always issue you a 1099-MISC form is your earnings for a particular year are $600 or more.


However, PayPal also issues 1099 form to eligible users. If you receive your payments through PayPal, you may want to consult your client regarding the form.


If you get numerous 1099 forms from your clients, be sure to file them together. Having paystubs also help to ensure accurate calculations. If you don’t receive one from your clients, you can create free pay stubs easily online.


As a contractor in freelance graphic design, you can deduct expenses for:

  • office bills
  • lodging
  • tuition for related education
  • business related food
  • software, equipment and material costs


The Internal Revenue Service (IRS) requires the expenses to be necessary and ordinary to be eligible for deductions. For your home office, you can write off everything from equipment, utilities, and rent. Your home office is only the portion of your home you use for work.


Travel costs incurred as a result of your job are also deductible. Meals and entertainment with web design clients can be deducted at a 50-percent rate.

Freelance Graphic Design Contractor Tax Help

When you work as a freelance contractor, your client will require you to complete W-2 form alongside work contracts and NDA agreements. They are supposed to calculate your yearly earnings for you and issue the 1099-MISC form in January of the following year.


Make sure you consult your clients to help understand how you should handle your taxes. In most cases, since you’re an independent contractor, their contract agreements will stipulate that you’re responsible for managing your taxes.


Do you have any question about filing for tax returns as a freelancer? Be sure to share them with us in the comments or contact us.

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