One of the most common questions new Arise contractors ask is: "What do I do about taxes?" It's a great question — and an important one. As a 1099 independent contractor, you're running your own business, which means taxes work differently than a traditional W-2 job. Here's everything you need to know.
1. You Are a Business — Act Like It
When you work through Arise as an independent contractor under Culturense LLC, no taxes are withheld from your paycheck. That means the full amount you earn hits your account — which feels great until tax time arrives unprepared.
Think of yourself as a sole proprietor. Your income from contracting is subject to two main taxes:
- Income Tax — based on your tax bracket (10%–37%)
- Self-Employment Tax — 15.3% on net earnings (covers Social Security & Medicare)
Set aside 25–30% of every payment into a separate savings account the day you receive it. Name it "Tax Fund" and don't touch it. You'll thank yourself in April and during quarterly payments.
2. Quarterly Estimated Tax Payments
Because no employer withholds taxes for you, the IRS requires you to pay taxes four times per year — these are called estimated tax payments. Missing them can result in underpayment penalties.
| Payment Period | Income Earned | Due Date |
|---|---|---|
| Q1 2025 | Jan 1 – Mar 31 | April 15, 2025 |
| Q2 2025 | Apr 1 – May 31 | June 16, 2025 |
| Q3 2025 | Jun 1 – Aug 31 | September 15, 2025 |
| Q4 2025 | Sep 1 – Dec 31 | January 15, 2026 |
You can make these payments directly at IRS.gov/pay or through the IRS Direct Pay system — it's free and straightforward.
3. Tax Deductions: Keep More of What You Earn
Here's the silver lining of contractor life: you can deduct legitimate business expenses from your taxable income. This reduces the amount you owe significantly. Keep receipts for everything!
Home Office Deduction
Deduct a portion of rent/mortgage for your dedicated workspace square footage.
Internet Bill
The percentage of your internet used for work is deductible (often 80–100%).
Equipment
Headset, USB adapter, second monitor, UPS — all deductible business purchases.
Computer / Hardware
Your work PC can be fully or partially deducted depending on personal vs. business use.
Training Costs
Client certification fees paid through Arise are deductible business education expenses.
Phone Bill
The work-use portion of your cell phone bill (if used for business) is deductible.
Use a free Google Sheet to log every business purchase with the date, amount, and category. This takes 2 minutes per receipt and saves hours at tax time.
4. The 1099-NEC Form
At the start of each year, Arise will send you a 1099-NEC form if you earned $600 or more. This form reports your gross earnings to the IRS and to you. You'll use it when filing your annual tax return.
- Watch for this form to arrive by January 31 of the following year
- You'll file it along with Schedule C (Profit and Loss from Business) and Schedule SE (Self-Employment Tax)
- Use tax software like TurboTax Self-Employed, FreeTaxUSA, or H&R Block for easy guided filing
5. Practical Tips from Experienced Contractors
- Open a dedicated business checking account — keep business income separate from personal funds
- Use a budgeting app like YNAB or Mint to track your tax savings goal
- Consider a tax professional for your first year — a CPA who knows self-employment taxes can often save you more than their fee
- Don't skip quarterly payments — the IRS penalty is small but adds up, and it's a stressful notice to receive
- Save your receipts digitally — take a photo immediately with your phone
Disclaimer
This post is for general educational purposes only and does not constitute legal or tax advice. Tax laws change regularly. Consult a qualified tax professional or CPA for advice specific to your situation.