Common IRS forms for independent contractor taxes
Independent contractors use a few key IRS forms to report income, calculate taxes and claim deductions. Here’s what each one does and when you need it.
1099 contractor forms
Independent contractors get 1099s instead of W-2s. Clients who pay you $500 or more during the year generally must send either Form 1099-NEC (nonemployee compensation) or Form 1099-MISC.
In a perfect world, adding up all of the 1099 forms you receive will equal your annual gross income. But don’t rely solely on your 1099s. You must track all income yourself — you’re responsible for reporting everything you earned, even if you don’t receive a 1099. This includes payments under $600 and income from clients who fail to send forms.
Form 1040
Form 1040 is the main federal tax return independent contractors use to report income, deductions, and tax payments. Many of the schedules below flow into it.
Schedule C
Schedule C is the form independent contractors use to report business income and deductible expenses. It determines whether your business made a profit or loss.
It’s also where you’ll list valuable business deductions to reduce your taxable income. The tax deductions you can claim vary based on your type of business, but typically include:
- Industry-specific equipment and tools
- Office furniture and computers
- Phone and internet expenses
- Business insurance premiums
Business insurance often fits naturally into this section because it’s considered an ordinary and necessary business expense.
For example, general liability insurance can help protect you if someone gets hurt or their property is damaged because of your work. Professional liability insurance can help cover claims that you made an error that caused financial losses. And if you have business equipment, inventory, or a workspace, commercial property insurance can help protect those assets.
These premiums are often deductible on Schedule C, no matter your profession. For example, licensed contractors can deduct the cost of tools and materials used to complete jobs, along with premiums for their contractor insurance. Fitness trainers can deduct personal trainer insurance premiums and the fitness equipment they use with clients.
At the end of the year, it’s a good idea to review your coverage to make sure it matches any changes in your business — new clients, services, equipment or locations. Keeping your insurance records organized will make it easier to claim these deductions when you file.
Remember: You can also deduct the employer portion of FICA taxes and can typically deduct any business insurance premiums you pay, no matter what type of business you run.
Tip: Learn about 16 amazing tax deductions independent contractors may qualify for. These include deductions for office expenses, car mileage, health insurance, and even hiring a certified public accountant (CPA).
Schedule SE
Schedule SE form calculates how much self-employment tax you owe for Social Security and Medicare. It’s based on your net profit from Schedule C. Here are the key points:
- You’ll pay this tax on your net earnings (profit calculated on Schedule C).
- The total rate is 15.3% (12.4% for Social Security, 2.9% for Medicare).
- This tax applies regardless of age, even if you’re already receiving benefits.
- You can deduct half of your self-employment tax on Form 1040.
Changes for independent contractor taxes for 2026 and beyond
Tax rules for independent contractors shift frequently, and several recent updates may affect your 2026 filing. Here are the big ones to keep an eye on:
The Qualified Business Income (QBI) deduction continues
The Qualified Business Income (QBI) deduction — also known as Section 199A — currently allows many independent contractors and small business owners to deduct up to 20% of their qualified business income.
Under previous law, this deduction was scheduled to expire after the 2025 tax year. However, recent legislation removed the sunset provision, meaning the QBI deduction continues beyond 2025 under current rules.
That said, eligibility can get complicated if your income is high or your business falls into a “specified service trade or business” (SSTB). A tax professional can help you determine how the deduction applies to your situation.
Ongoing changes to payment platform reporting (Form 1099-K)
Reporting rules for Form 1099-K — the form used by payment platforms such as PayPal, Venmo and Stripe — have been in flux over the last few years.
Historically, processors issued a 1099-K only if you received over $20,000 and had more than 200 transactions. Congress attempted to lower that threshold, and the IRS has delayed and revised implementation multiple times.
Because requirements continue to shift, the safest approach is to check the most current 1099-K guidance on the IRS’s site or speak with a tax professional if you use payment apps, credit card processors, or online marketplaces like Upwork or Etsy.
What do I do if I get a 1099 Form from a client?
If you receive a 1099 form, use it to confirm the income you’ve already tracked for your business. It’s a receipt of payments—not a replacement for your own records.
If your small business or sole proprietorship is a limited liability company (LLC), chances are you’re paying taxes on your earnings as a pass-through entity. Your taxable income comes from your earnings from your services or products, and your accounting software already tracks all the money you’ve earned through invoices — the 1099s are just confirmation of income you’ve already recorded.
Always consult tax professionals about tax-related questions, especially on how you classify your business.
How to file taxes as an independent contractor
You file independent contractor taxes by gathering your income records, organizing your expenses, and submitting Form 1040 along with Schedule C and Schedule SE. Here’s what that process looks like step by step.
1. Gather your documents
Most independent contractors who earn money from their work will need to file a federal income tax return, especially if they have $500 or more in net self-employment income.
If you’re running your business as a sole proprietor, your default taxpayer identification number is your Social Security number (SSN). But if you have employees and applied for an employer identification number (EIN), you’ll need this number to meet tax requirements.
Gather all of the necessary documents for both your personal and business income. This might include:
- All 1099 forms from clients
- Records of income without 1099s
- Your Social Security number (or EIN)
- Income records from paid invoices
Remember, even if the people you work for are sloppy with their paperwork, the IRS makes it your responsibility to report payments and income you receive during the year.
2. Organize your records
Gather your income documents first — then tackle those expenses. Here’s where solid record-keeping pays off. Every receipt, proof of transaction, and record counts when it’s time to claim deductions and lower your tax liability.
Just make sure to keep receipts. If you get audited, the IRS will want to see them.
3. File taxes yourself via a tax professional
We recommend working with a licensed tax professional to ensure you file correctly and help avoid IRS penalties. Plus, a pro can give you advice on your estimated taxes or setting up your accounting system.
But maybe your business taxes are pretty simple, or your business hasn’t changed much from last year. If that’s the case, you could take a crack at filing yourself.
When you go this route, you can mail or submit your tax forms online. You can download the forms from the IRS’s site if you choose the paper route. Local libraries and post offices often have free copies of the form for taxpayers, too.
You can also e-file directly by creating an account on the IRS’s website or using commercial tax preparation software.
