Gig Tax Guide
Upwork Taxes: What Every Freelancer Needs to Know
Upwork treats freelancers as independent contractors, so no taxes are withheld from your earnings. You owe your own federal, state, and self-employment taxes on your net income — and because most Upwork work is done from a desk, your biggest deductions are the home office, software, and equipment you use, plus Upwork's own fees. Here's how Upwork taxes work.
How Upwork taxes work
You're an independent contractor
No taxes are withheld from your pay. You owe federal and state income tax plus self-employment tax on your net earnings.
Self-employment tax is 15.3%
That's 12.4% Social Security + 2.9% Medicare on your net earnings — on top of regular income tax. It funds the benefits an employer would normally split with you.
Deductions lower your taxable income
Business expenses — equipment, software, supplies, and phone — reduce the net earnings you're taxed on. Tracked properly, they often save more than any other single move.
You pay as you go, quarterly
Instead of one April bill, the IRS expects estimated payments four times a year. Paying quarterly avoids an underpayment penalty.
Do you get a 1099 from Upwork?
Upwork processes client payments as a third-party platform, so it issues US freelancers a Form 1099-K when they meet the IRS reporting threshold for the year. The 1099-K reports your gross earnings before Upwork's service fees are taken out.
Reporting thresholds for the 1099-K have changed in recent years, so you may not always receive a form. Either way, you must report all of your Upwork income — and you deduct Upwork's service fees as a business expense.
What Upwork freelancers can deduct
Home office
The portion of rent/mortgage, utilities, and insurance for the part of your home used regularly and exclusively for work — often a freelancer's biggest deduction.
Computer, software & subscriptions
Your computer, design/dev tools, and subscriptions used for client work (larger purchases may be depreciated).
Internet & phone
The business-use share of your home internet and phone bills.
Upwork service fees
The freelancer service fee Upwork deducts from your earnings is a fully deductible business expense.
Professional development
Courses, certifications, and reference materials that maintain or improve your freelance skills.
Equipment & supplies
Desk, monitor, headset, and other equipment bought for your freelance business.
Frequently asked questions
Does Upwork take out taxes for me?
No. Upwork pays freelancers as independent contractors and withholds nothing. You're responsible for setting aside and paying your own income tax and the 15.3% self-employment tax.
How much should I set aside for Upwork taxes?
A common rule of thumb is to set aside 25–30% of your net earnings (what's left after mileage and other deductions) to cover self-employment tax (15.3%) plus federal and state income tax. Your exact rate depends on your total household income and state. Use the Tax Set-Aside calculator to get a number for your situation.
Do I get a 1099 from Upwork?
Upwork issues US freelancers a 1099-K (it processes client payments as a third-party platform) when they meet the IRS threshold for the year. Thresholds have changed recently, so you may not always get one — but you must report all income regardless.
What can Upwork freelancers deduct?
Because the work is desk-based, the biggest deductions are usually the home office, your computer and software, internet and phone, and Upwork's service fees. Professional development and equipment count too. Mileage generally doesn't apply unless you travel for client work.
When are Upwork taxes due?
Self-employed earners generally pay estimated taxes four times a year — around April 15, June 15, September 15, and January 15 — and file an annual return by April 15. Paying quarterly avoids an IRS underpayment penalty.
Authoritative IRS resources
Free calculators for Upwork freelancers
Stop guessing what you owe
UnifyOne tracks your freelance earnings, expenses, and tax set-aside automatically — so quarterly taxes are never a surprise.
This guide is educational information, not tax advice. Tax rules, thresholds, and the IRS standard mileage rate change yearly — confirm current figures with the IRS or a qualified tax professional for your situation.