How do I report freelance income from a 1099-NEC in 2025?

Freelance income reported on a 1099-NEC (Nonemployee Compensation) is reported on Schedule C (Profit or Loss From Business) attached to your Form 1040.

Step-by-step filing process:

• Gather all 1099-NEC forms. Clients who paid you $600 or more must send one by January 31.
• Report total gross income on Schedule C, line 1. Include all income, even amounts below $600 that did not generate a 1099-NEC.
• Deduct business expenses on Schedule C (lines 8-27). Common deductions: supplies, software subscriptions, professional development, marketing, business insurance, and the home office deduction.
• Your net profit (line 31) flows to Form 1040 as income and to Schedule SE for self-employment tax.

Self-employment tax: You owe 15.3% (12.4% Social Security on income up to $168,600 for 2024 + 2.9% Medicare on all net income). An additional 0.9% Medicare surtax applies on SE income over $200,000 ($250,000 married filing jointly). You can deduct the employer-equivalent half (7.65%) on Schedule 1, line 15.

Qualified Business Income (QBI) deduction: As a sole proprietor, you may qualify for a 20% deduction on qualified business income under Section 199A. For 2024, the full deduction phases out for specified service trades and businesses (consultants, lawyers, doctors) above $191,950 single / $383,900 married filing jointly.

Record keeping: Maintain a separate business bank account and keep receipts for all deductions. Use accounting software like QuickBooks Self-Employed or Wave to track income and expenses throughout the year.