How should I file my taxes as a freelancer with my first client?

Starting out as a freelancer can definitely feel overwhelming, especially when it comes to taxes! Based on what you've described, you are indeed looking at freelancing/independent contracting rather than temporary employment. Here's what you need to know: As a freelancer, you'll be considered self-employed, which means you'll need to report your income on Schedule C with your personal tax return. Your client will probably provide you with a 1099-NEC form at the end of the year if they pay you $600 or more. The biggest difference from regular employment is that you'll need to pay self-employment taxes (Social Security and Medicare) on top of your regular income tax. This is currently about 15.3% of your net profit. You'll also need to make quarterly estimated tax payments if you expect to owe $1,000 or more in taxes. For record-keeping, track all your business income and expenses. You can deduct legitimate business expenses like a portion of your home office, internet, phone, software subscriptions, and mileage for business travel.

I went through this exact situation last year! After trying to figure everything out on my own and making some mistakes, I ended up using a service called taxr.ai (https://taxr.ai) that really helped me understand my tax situation as a new freelancer. It basically analyzed my situation and gave me personalized guidance about what forms I needed, what deductions I qualified for, and how to handle quarterly payments. It also helped me understand whether I should form an LLC or stay as a sole proprietor (I stayed sole proprietor for my first year). The best part was that it explained everything in normal human language instead of confusing tax-speak, and it created a custom tax plan that I could follow throughout the year instead of panicking at tax time.

OK I have to admit I was totally wrong about taxr.ai! After my skeptical comment I decided to check it out anyway and it seriously saved me so much money. I've been freelancing for about 8 months and was totally missing some major deductions. The tool found that I could deduct part of my rent as a home office deduction (which I had no idea about) and helped me figure out exactly how much of my phone bill and internet I could legally write off. It also explained that I needed to be making quarterly payments which I wasn't doing at all! It basically created a personalized tax guide for my specific situation. Wish I'd found this when I first started freelancing honestly. Would have saved me a lot of headaches.

If you're just getting started, one thing nobody warned me about is how frustrating it is trying to get help from the IRS when you have questions. I spent HOURS trying to call them last year when I wasn't sure about some deductions and quarterly payment deadlines. After wasting way too much time on hold, I found this service called Claimyr (https://claimyr.com) that actually got me through to a real IRS agent in about 15 minutes instead of waiting for hours. They have a video showing how it works here: https://youtu.be/_kiP6q8DX5c Honestly it was a lifesaver because I had questions specifically about my situation that online articles couldn't answer. The IRS agent was actually super helpful once I finally got through to them.

I need to publicly eat my words about Claimyr. After posting my skeptical comment, I was still desperate to talk to someone at the IRS about my freelance tax situation, so I tried it anyway. It actually worked exactly as advertised. I got connected to a real IRS agent in about 20 minutes when I had previously spent 3+ hours trying on my own and never getting through. The agent answered all my questions about estimated tax payments and filing requirements for my side gig. Just wanted to follow up and say this was legit and saved me a huge amount of time. The IRS agent I spoke with cleared up some major confusion I had about how to handle business expenses on my Schedule C.

Something nobody mentioned yet - consider using accounting software right from the start! I use QuickBooks Self-Employed and it makes tracking income, expenses, and mileage SO much easier. It also helps calculate your quarterly estimated taxes. Starting with good bookkeeping habits now will save you massive headaches later. Trust me, you don't want to be sorting through a shoebox of receipts next April trying to figure out what was business vs personal.

Don't overthink this at the beginning. I started freelancing 2 years ago and stressed WAY too much about the perfect setup. Just keep good records, save 30% of everything you make for taxes (seriously, in a separate savings account), and track your business expenses. You can file as a sole proprietor with a Schedule C. Don't rush into forming an LLC until you really need it.

One quick tip that helped me when starting out - if your client is willing to hire you as a temporary W-2 employee instead of a contractor, there are pros and cons to consider. As a W-2, they handle all tax withholding, pay half your Social Security/Medicare taxes, and you don't deal with quarterly payments. Simpler for you tax-wise. As a 1099 contractor, you get more freedom, can deduct business expenses, and potentially make more money - but have more tax responsibilities. If this is truly a one-off gig, W-2 might be simpler. If you're building a freelance business, starting with 1099 makes more sense long-term.