Are you tired of working for others? Being your own boss can be very rewarding both financially and spiritually, but there are challenges associated with freelance work. Taxes are one of the most difficult aspects because self-employment brings a special set of tests.
Freelancers work as independent contractors and those who employ them are not required to withhold payroll taxes (such as Medicare and Social Security contributions). As both employer and employee (technically, you employ yourself), you must contribute both sets of taxes — the normal income tax that you would pay on your income as an employee and the “self-employment tax” that covers Medicare and Social Security contributions.