I Asked ChatGPT What a Tax Expert Would Tell a Freelancer Before Filing — Here’s What It Said
There’s a lot to admire about freelance life. You set your own hours and prices. Even if freelancing provides extra income on top of your traditional 9-to-5, that’s more money to put toward your emergency savings or a sinking fund for that dream vacation. Unfortunately, the lovefest often ends at tax time, when things get trickier.
Between questions about deductions and different types of forms, even the most dedicated freelancer might want to run screaming back to the office. Talking to a tax expert could assuage your anxiety. Don’t have a human expert on call? Try the next best thing — ask ChatGPT.
While you may ultimately choose to speak with an accountant, talking to ChatGPT can help you develop some baseline strategies. So I asked the AI: “What would a tax expert tell a freelancer before they file their taxes?”
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1. Separate Profit From Cash
First, ChatGPT reminded freelancers that they’re taxed on their net profit — not what hits their bank accounts. The AI offered two simple equations to drive its point home:
Income = everything you earned
Expenses = only what’s ordinary and necessary for your work
“If you didn’t subtract expenses correctly, you’re overpaying,” it said. “If you got aggressive, you’re inviting trouble.”
In other words, what lands in your checking account isn’t necessarily what you’re taxed on — your net profit is what counts.
2. Don’t Forget Self-Employment Tax (This Surprises People)
The best part of freelancing may be the freedom to be your own boss, but holding dual roles as employee and employer can complicate your taxes if you’re not careful.
“You owe income tax plus self-employment tax (Social Security and Medicare),” the AI said.
Confused? ChatGPT offered what it called a “rough rule” to set aside 25% to 30% of your net income. If you’re a high earner or live in a high-tax state, you’ll want to set aside even more. The AI also noted that a tax professional would double-check your calculations — another reason to consult one.
It’s also worth noting that freelancers may need to make quarterly estimated tax payments, not just settle up in April.
3. 1099s Are Not the Whole Story
Reviewing your documentation, you notice that one client didn’t send a 1099. They paid you over PayPal. Inwardly, you celebrate — because if there’s no tax form, you surely don’t need to report it. What the IRS doesn’t know can’t hurt them, right?
Actually, not reporting income can hurt you — quite a bit, as ChatGPT reminds you. It doesn’t matter if a client never sent a 1099 or paid you via PayPal, Venmo, crypto or even cash. You still have to report it.
“The IRS matches what they receive — not what you choose to report,” ChatGPT said.
Freelancers are required to report all income, whether or not they receive a Form 1099.
4. Take Deductions — but Only the Defensible Ones
Any listicle focused on tax advice for freelancers wouldn’t be complete without mentioning deductions. ChatGPT obliges, but with a note of caution: “Experts love deductions, but hate sloppy ones.”
So what are some of the most common legitimate deductions freelancers should consider? ChatGPT lists a few:
Home office (if used exclusively for work)
Software, tools and subscriptions
Phone and internet (business portion only)
Education directly related to your work
Travel — but only if it’s truly business-related
The AI also flagged a few red flags that might attract the wrong kind of attention from Uncle Sam:
Writing off personal meals
“Rounding” numbers
Claiming 100% business use on obviously mixed items
To make sure you’re being responsible about deductions, you may want to sit down with a flesh-and-blood professional.
5. Retirement Equals Tax Strategy
ChatGPT was blunt about one area of tax planning freelancers shouldn’t neglect: “A freelancer without a retirement plan is leaving money on the table.”
Freelancers looking to lower their taxable income can consider a SEP IRA, Solo 401(k) or traditional IRA. Deadlines matter, though. For example, SEP IRA and Solo 401(k) contributions may be made up until the tax filing deadline (including extensions), while traditional IRA contributions generally must be made by the tax filing deadline without extensions.
“A tax expert would ask about this before filing,” the AI advised.
6. Last Check Before Filing
Finally, a tax professional would want to dot the i’s and cross the t’s, making sure everything checks out. According to ChatGPT, that may involve asking a few core questions:
Does income roughly match prior years or make sense for your workload?
Did anything change this year (new state, new business structure, big income jump)?
Are we optimizing for this year only, or your longer-term tax picture?
When it comes to many things in life — including taxes — safe is better than sorry.
The Bottom Line
While ChatGPT is no replacement for advice from a tax professional who knows a freelancer’s history, it can provide a general sense of what to expect from those conversations. There’s no need to run back to office life for the sake of streamlined taxes. With careful planning and smart strategy, all aspects of freelance life can keep working for you — as you work for yourself.
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal, or tax advice.
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