Tax Extension for the Self-Employed and 1099 Workers

Form

4868

Self-employment tax

15.3%

File by

April 15, 2027

Return then due

October 15, 2027

Which form you use

• Sole proprietor, freelancer, gig or app-based worker, independent contractor: Form 4868. Your business income goes on Schedule C of your Form 1040.
• Single-member LLC owned by you: Form 4868, unless the LLC elected to be taxed as a corporation. By default an LLC with one owner who's a person reports on the owner's return.
• Partnership, multi-member LLC or S corporation: the business extends its own return with Form 7004. You still extend your personal return with Form 4868. Form 4868 vs Form 7004.

Estimating your tax when you're self-employed

Line 4 of Form 4868 is your total tax for the year, and for self-employed people that includes self-employment tax, not just income tax.

• Self-employment tax is 15.3%: 12.4% for Social Security and 2.9% for Medicare. You usually owe it if your net earnings from self-employment were $400 or more. You figure it on Schedule SE and can deduct half of it when you figure your adjusted gross income.
• Income tax on your business profit, on top of any wages.
• Net profit, not gross. Subtract business expenses from your 1099 and other income first. Your bookkeeping or bank records are enough for an estimate.

Line 5 is what you've already paid: withholding from any job, plus the estimated tax payments you made for the year.

An example

This is an example with round numbers, not tax advice. A freelance designer had $60,000 of 1099 income and $10,000 of expenses, so about $50,000 of net profit, and no other income.

• Self-employment tax: roughly $50,000 times 92.35% times 15.3%, about $7,100.
• Income tax on what's left after deductions: say about $3,400 using current brackets and the standard deduction.
• Line 4: about $10,500. Line 5: they paid $6,000 in estimated tax during the year. Line 6: about $4,500.
• They pay the $4,500 online by April 15, 2027 and mark it as an extension. That payment is their extension, with no form to file.

Estimated payments don't wait for the extension

The IRS generally expects individuals who will owe $1,000 or more when they file, including sole proprietors, to pay estimated tax during the year. The first payment for the new year is due the same day as your extension: income earned January 1 to March 31 has a payment due April 15. Then June 15, September 15 and January 15 of the next year. A weekend or legal holiday moves the date to the next business day.

So on April 15, 2027 you may have two separate payments: your balance for 2026, and your first 2027 estimated payment. Filing Form 4868 doesn't change the second one.

You generally avoid the underpayment penalty if you paid at least 90% of the current year's tax or 100% of the prior year's tax, whichever is smaller (see the IRS estimated tax page for the higher-income rule). Form 2210 figures the penalty.

Records to gather while you're extended

• Every 1099-NEC, 1099-K and 1099-MISC, plus income that didn't come with a form.
• Business expenses, mileage and home office records.
• Your estimated tax payment confirmations.
• Any Schedule K-1 from a partnership or S corporation you own part of. A late K-1 is a reason many owners extend.

Questions people ask

Do I need a separate extension for my business?

Not if your business is a sole proprietorship or a one-owner LLC on your Form 1040. Form 4868 covers your whole return, Schedule C included.

Does the extension give me more time to pay self-employment tax?

No. Self-employment tax is part of your total tax and is due April 15, 2027 like the rest.

I have a W-2 job and a side business. Same form?

Yes. One Form 4868 covers your whole Form 1040. Count your withholding on line 5.

Common mistakes

• Leaving self-employment tax out of line 4. It's often the biggest part of a freelancer's bill.
• Using Form 7004 for a sole proprietorship. If it's on your Schedule C, it's Form 4868.
• Skipping the April estimated payment because you extended. It's a separate deadline.
• Putting gross income on line 4. Line 4 is tax, not income.

All common Form 4868 mistakes.