Most US taxpayers work directly for an employer. But just because you earn money from a company does not mean you’re technically employed by them. If you work as a freelancer, contractor, or do not have taxes withheld by your company, you may actually be considered self employed.
According to the IRS, you’re considered self employed if:
- You work as a sole proprietor or independent contractor
- You’re a member of a partnership that operates a trade or business
- You work for yourself (this include part-time and gig work)
Here’s another way to determine if you’re self employed:
Did you fill out a W-9 (independent contractor form) when starting a job? Do you submit invoices? Do you receive 1099 tax forms at the end of the tax year? If so, you’re likely self employed.
It’s also possible that you’re both employed by a business and self employed. Many Americans work for both an employer and themselves.
For instance, you could work a 9-to-5 software job with an employer, but offer development services to clients in your spare time as a contractor.
If you work as a teacher, but driver for Uber in the summer, you’re also considered self employed.
If you’re self employed in any way, you need to report your self-employment income on your tax returns. Since your income is likely not taxed in advance through withholdings taxed, you may be are required to pay estimated taxes four times a year, and file self-employment tax forms, along with your personal tax return.