The main form used by self-employed freelancers to report income to the I.R.S is the Schedule C. Self-employment income can be generated in a variety of ways, but it all must be reported. In some cases, businesses with which freelancers contract will send 1099s; in other cases, such as cash and barter transactions, freelancers must keep their own detailed records.

1099 Income Tax Forms

The most common way many freelancers are paid is through a private contractor agreement with companies that are their clients. Record keeping for such payments is easy, since American companies are required to send out 1099 forms whenever they pay a non-employee contractor more than $600 in a single calendar year. These forms are sent to both the taxpayer and the I.R.S. and must be sent by the end of January following the tax year in question. Check these statements against pay stubs; sometimes, companies make mistakes.

Income under the $600 threshold is still reportable (and therefore subject to taxes) by the taxpayer. So freelancers with a large number of $400 and $500 checks from different clients have to refer to their pay stubs. Note that neither the 1099 forms nor the pay stubs should be included when filing the tax forms: They are simply for the taxpayer's records; they should, of course, be kept in case of an audit. Also note that some companies send out 1099s even for amounts under the $600 limit.

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