Core Insights - Freelancers, 1099 contractors, and gig workers face unique tax challenges, including itemizing business expenses and covering their own Social Security and Medicare taxes, which can lead to unexpected tax bills [1][2] Tax Responsibilities - According to the IRS, individuals with net earnings of $400 or more after business expenses are liable for self-employment taxes [2] Tax Reduction Strategies - The Qualified Business Income (QBI) deduction allows business owners, including sole proprietors, to write off 20% of their business income, which can lower the amount owed to the IRS [3] - Structuring a business as an S-Corp can reduce FICA taxes, as freelancers only pay these taxes on the salary portion of their profits [4] - Freelancers earning approximately $30,000 to $40,000 should consider consulting a professional about filing as an S-Corp for potential tax benefits [5] Retirement and Health Savings - Opening a SEP-IRA or Solo 401(k) can help freelancers save for retirement while reducing tax liability through deductible contributions [6] - Enrolling in a Health Savings Account (HSA) allows freelancers to make pre-tax contributions that can reduce tax liability and cover medical costs [7] Deductions Tracking - Freelancers can access various business-related deductions not available to W-2 employees, such as home office expenses and mileage, but must maintain careful records to maximize these deductions [8]