Year-End Tax Checklist for Freelancers: 9 Things to Do Before December 31

For most freelancers, tax season starts in a panic sometime in March. But many of the moves that actually change your tax bill have to happen before December 31. After that, the year is closed and all you can do is report it. Set aside an afternoon in November or early December and work through this list.

1. Total up what you’ve earned so far

Everything else on this list depends on one number: your net self-employment income for the year. Add up what you’ve been paid, estimate what’s still coming in before the year ends, and subtract your business expenses. If your hours and rates are logged, this takes minutes. If not, start with your bank deposits and invoices.

2. Check your estimated tax payments

If you’re self-employed in the US, you’re generally expected to pay tax during the year through quarterly estimated payments. The last one for this year is due in mid-January. Compare what you’ve paid so far with what you’re likely to owe. If you’ve fallen behind, catching up now can reduce underpayment penalties.

A common safe harbor: if you pay at least 100% of last year’s total tax (110% if your income was higher than $150,000), you generally won’t owe a penalty, even if you owe more when you file.

3. Send any last invoices

Most freelancers report income in the year they receive it. Make sure everything you’ve finished is invoiced, and follow up on anything overdue. If it’s been a very strong year, some freelancers choose to send December invoices in early January so the income lands in next year. Just be consistent and honest about it.

4. Gather your deductible expenses

Every legitimate business expense lowers both your income tax and your self-employment tax. Go through the year and collect receipts for things like:

• Software, subscriptions and web hosting
• Equipment such as a computer, phone or camera used for work
• A home office, if you use the space regularly and only for work
• Business mileage and travel
• Professional fees, courses and the portion of your phone and internet used for work

If you were already planning to buy equipment you need for work, buying it before December 31 can move the deduction into this year.

5. Make (or plan) retirement contributions

Retirement accounts are one of the biggest tax breaks available to self-employed people. A SEP-IRA lets you contribute a share of your net self-employment income, and you can fund it right up to your filing deadline. A Solo 401(k) often allows larger contributions at lower incomes, but it’s best to set it up before the year ends. A traditional or Roth IRA can be funded until the April filing deadline. Opening the right account now keeps every option open.

6. Check your health insurance deduction

If you pay for your own health insurance and you aren’t eligible for an employer plan, you may be able to deduct your premiums. Download a year-to-date statement now so you don’t have to hunt for it in April.

7. Confirm your clients have your details

Clients who pay you enough during the year usually need to send you a Form 1099-NEC in January. Check that each one has your current name, address and tax ID (a completed Form W-9). Remember that you owe tax on all of your income, whether or not a form arrives.

8. Clean up your records

Separate business and personal transactions, label anything unclear and file your receipts in one place. Export a timesheet or earnings summary for the year for each client. This is the document your accountant (or tax software) will want first, and it’s your proof if anyone asks questions later.

9. Pick your set-aside rate for next year

Use this year’s numbers to decide what percentage of each payment to set aside for taxes next year. Many freelancers start at 25–30% and adjust from there. The goal is to never be surprised in April again.

This article is general information, not tax advice. Rules and limits change every year, so check the current IRS guidance or talk to a tax professional about your situation.

How Wage Tracker Widgets helps at year end

We built Wage Tracker Widgets for iPhone so the numbers on this list are already there when you need them:

• Every hour, logged as you go. Start, switch and stop the timer as you work, or log past work you forgot to track, with a separate hourly rate for each client or organization.
• Totals at a glance. See today and this week on the Today tab, and every entry grouped by day, with weekly and monthly totals, in the Log.
• Built-in tax set-aside. Choose a percentage and see how much of your earnings to put aside.
• Year-end reports with Premium. See hours and earnings by week, month or year, with a breakdown by client, and export PDF and CSV timesheets for your records or your accountant.
• Private by design. There’s no account, and your work data stays on your device.

The free version includes the timer, the Log, logging past work, widgets, Live Activities, Siri, the tax set-aside and up to two clients or organizations. Premium removes the banner ads and adds unlimited clients, reports, PDF and CSV timesheets, plus backup and restore. Premium is $4.99 a month or $39.99 a year, and either plan starts with an introductory first month for $0.99.

Download Wage Tracker Widgets on the App Store

Frequently asked questions

When is the last estimated tax payment of the year due?

In the US, the fourth-quarter estimated payment for the year is usually due in mid-January of the following year. Check the IRS calendar for the exact date.

Can I still lower my taxes after December 31?

Some things, yes. You can usually fund a SEP-IRA or a traditional IRA up to your filing deadline. But most other moves, such as buying equipment or paying expenses, have to happen before the year ends.

What records do freelancers need for taxes?

Keep a record of all income, receipts for business expenses, mileage logs, and timesheets or earnings summaries for each client. Organizing them in December makes tax season much easier.

More articles