- 1). Fill out and submit a 1099 form to employers before performing any work. This form will be used to verify how much the employer paid you for the work completed. You will receive a copy of this form at the beginning of tax season, usually by the end of January.
- 2). File and pay Estimated Tax quarterly throughout the year. This tax is essentially income tax that would have been taken out of your paycheck had you worked exclusively for one employer. File tax form 1040-ES if your business is a Sole Proprietorship, S corporation or Partnership. Use Form 1120-W if your business is a corporation.
- 3). File and pay Self-Employment Tax. This tax is included in your Estimated Tax payment. This tax covers Social Security and Medicare taxes. Refer to Form 1040 to determine how much tax you owe.
- 4). File your income tax return during tax season. Use the information found on 1099 forms to complete your income tax return. If you overpaid Estimated Tax during the year, you will receive a refund. If you did not pay enough, you will owe taxes.
- 5). Make a copy of all tax forms and returns. Maintain tax records for at least five years.
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