FAQ About World of Freelancing

Freelancing has specific tax implications that freelancers need to be aware of to ensure compliance with tax laws and fulfill their tax obligations. The exact tax implications may vary depending on your country and local tax regulations, so it's important to consult with a tax professional or accountant who is familiar with your specific jurisdiction.

As a freelancer, you're generally considered self-employed, which means you're responsible for paying self-employment taxes. These taxes typically include both the employer and employee portions of Social Security and Medicare taxes. Unlike traditional employees, freelancers are responsible for paying the full amount, which is typically 15.3% of their net income. It's important to budget for these taxes and set aside a portion of your income to cover them.

Instead of having taxes automatically withheld from your paycheck, freelancers are usually required to make estimated quarterly tax payments. These payments are typically made to cover your income tax and self-employment tax liabilities. The amount you need to pay is based on your projected income for the year. Failing to make these estimated tax payments or underpaying them may result in penalties and interest charges.