Self-employed and freelancers
Tax Help for Self-Employed and Freelance Workers in Chicago
Quarterly estimates, mileage and deductions.
Common mistakes in this industry
- Self-employment tax is roughly 15.3% on net profit and sits on top of income tax. Setting aside only the income tax leaves a shortfall every April.
- The mileage deduction needs a log with dates and purpose. A year-end total taken from an app with no trip detail rarely survives a question.
- Platform reporting thresholds have changed several times since 2022. We check the current rule against your platform statements rather than the number you remember.
- A home office deduction has a strict exclusive-use test, and claiming it on a kitchen table is not worth the exposure.
Self-employed
Frequently asked questions
How much should I set aside from each payment?
Between 25% and 30% of net profit covers federal and state income tax and self-employment tax for most people at this income level. We set the exact figure from your own numbers after the first quarter and adjust as the year runs.
What do I need to claim mileage?
A log with the date, the destination and the business purpose of each trip. Rideshare platforms produce online miles, and the trip to the first pickup and home from the last one usually count as well when the log supports them.
I missed my quarterly payments. What now?
Pay as soon as you have the money, since the underpayment penalty accrues by the day. Making the remaining quarters larger reduces the total. We calculate what to send now and what to send in January.
Should I form an LLC?
An LLC gives liability separation and changes nothing about the tax by itself. The saving comes from an S corporation election, and the election starts paying off once net profit is steady around $60,000 or more. Below that, the payroll and filing cost outweighs the benefit.
