Introduction
Freelancers and independent contractors in Delaware are responsible for handling their own taxes, as they do not have taxes withheld from their income like traditional employees. This means self-employed individuals must report income, pay estimated taxes, and take advantage of deductions to reduce their tax liability.
This guide explains how to file taxes as a freelancer or contractor in Delaware, covering income reporting, deductions, estimated tax payments, and IRS compliance.
1. Do Freelancers and Contractors Pay Taxes in Delaware?
Yes, self-employed individuals in Delaware must:
- Pay federal and state income tax on earnings.
- Pay self-employment tax (15.3%) for Social Security and Medicare.
- Make quarterly estimated tax payments to avoid penalties.
2. How to Report Freelance or Contractor Income
Freelancers and independent contractors report income using:
- IRS Form 1040 (Schedule C) – Reports business income and expenses.
- IRS Form 1099-NEC – Received from clients who paid $600 or more.
- Bank statements and invoices – Track income from smaller payments that may not be reported on a 1099-NEC.
3. Self-Employment Tax in Delaware
- Self-employed individuals pay 15.3% self-employment tax (12.4% for Social Security, 2.9% for Medicare).
- Delaware does not have a separate state self-employment tax but does require state income tax payments.
4. How to Make Estimated Tax Payments in Delaware
Since no taxes are withheld from freelancer income, estimated tax payments must be made four times a year.
Quarterly Estimated Tax Payment Deadlines
| Quarter | Due Date |
|---|---|
| January – March | April 15 |
| April – June | June 15 |
| July – September | September 15 |
October – December January 15 (following year)
- Federal estimated tax payments go to the IRS (Form 1040-ES).
- Delaware state estimated tax payments go to the Delaware Division of Revenue.
5. Best Tax Deductions for Freelancers in Delaware
Freelancers can reduce taxable income by deducting business expenses.
Common Tax Deductions
- Home Office Deduction – Deduct a portion of rent/mortgage if using a dedicated workspace.
- Internet & Phone Expenses – Business-related internet and phone costs.
- Office Supplies & Equipment – Computers, printers, and office furniture.
- Business Travel & Meals – Deduct travel and 50% of meals for business purposes.
- Health Insurance Premiums – Deduct premiums if self-employed.
6. Delaware State Tax Filing Requirements for Freelancers
- File Delaware Form 200-01 (Resident) or 200-02 (Non-Resident/Part-Year Resident).
- Delaware’s state income tax rates range from 2.2% to 6.6% based on taxable income.
- Report all freelance income, even if not reported on a 1099-NEC.
7. Avoiding IRS Penalties for Underpayment
- Pay at least 90% of the current year’s tax liability or 100% of the previous year’s tax liability to avoid penalties.
- Use the IRS Safe Harbor Rule to calculate estimated payments accurately.
IRS Compliance & Forms for Self-Employed Taxpayers
- Form 1040 (Schedule C) – Reports freelance income and expenses.
- Form 1040-ES – For quarterly estimated tax payments.
- Form SE – Calculates self-employment tax.
- Delaware Form 200-01 or 200-02 – For state tax filings.
Conclusion
Freelancers and independent contractors in Delaware must file federal and state tax returns, make quarterly estimated payments, and track business expenses to maximize deductions. Proper tax planning ensures compliance while reducing tax liability.
For expert tax planning and self-employed tax filing assistance, schedule a meeting with our CPA Anshul Goyal by clicking at https://calendly.com/anshulcpa/ now.
Frequently Asked Questions (FAQs)
1. Do freelancers have to pay Delaware state taxes?
Yes, freelancers must report all income and pay Delaware state income tax.
2. How much is self-employment tax in Delaware?
Freelancers pay 15.3% self-employment tax, plus Delaware state income tax (2.2% to 6.6%).
3. What deductions can freelancers claim in Delaware?
Common deductions include home office expenses, equipment, internet, phone, travel, and health insurance.
4. When are estimated tax payments due for freelancers?
Quarterly payments are due on April 15, June 15, September 15, and January 15.
5. Should I hire a CPA to handle my freelance taxes?
Yes, a CPA helps maximize deductions, file taxes correctly, and avoid IRS penalties.
About Our CPA
Anshul Goyal, CPA EA FCA is a licensed Certified Public Accountant and an IRS Enrolled Agent (EA). He specializes in self-employed tax planning, estimated tax payments, and IRS compliance.
Schedule a consultation today with Anshul Goyal, CPA, for expert tax-saving strategies for freelancers.