Self-Employment Taxes in Florida: Avoiding IRS Red Flags for Contractors and Freelancers

Working for yourself has plenty of perks, but when it comes to taxes, it also brings unique responsibilities. In Florida, self-employed individuals, independent contractors, and gig workers must make their own Social Security and Medicare payments, as well as estimated income tax payments throughout the year.

Unfortunately, self-employed taxpayers are often a focus of Internal Revenue Service (IRS) enforcement. From underreporting income to overstating deductions, the IRS has flagged certain patterns as high-risk.

If you’re a freelancer, consultant, or sole proprietor in Florida, Florida tax-IRS attorney Ronald Cutler explains how understanding your self-employment tax obligations and avoiding common mistakes is key to staying out of trouble.

What Florida Freelancers Need To Know About Self-Employment Taxes

Self-employed taxpayers don’t have an employer to withhold payroll taxes. Instead, they are responsible for paying self-employment tax themselves, which is currently 15.3 percent of net earnings. This covers both the employer and employee portions of Social Security and Medicare.

Under IRS guidelines, Florida self-employed taxpayers must:

• File a Schedule C to report business income and expenses.
• Calculate net earnings and file Schedule SE for self-employment tax.
• Make quarterly estimated tax payments according to IRS schedules using Form 1040-ES.
• Report all income, even if no 1099 was issued.
• Track and document deductible expenses accurately.

In Florida, where gig work, real estate, and tourism-related self-employment are common and often lucrative, missing estimated payments or misclassifying income can result in serious IRS penalties. Keeping clean records and filing on time helps reduce audit risk and avoid costly surprises.

Common IRS Red Flags That Trigger Audits for Self-Employed Florida Residents

According to a 2025 Kiplinger report, self-employed individuals are statistically more likely to be audited than W-2 employees. This is largely because income from self-employment is easily underreported, and deductions are frequently abused or inflated.

Worried about the chances of being audited? If you are a Florida contractor or freelancer, watch out for these red flags:

• Having significant self-employed income, as audit risks increase the more you make.
• Taking excessively high deductions for items such as travel, meals, or home office use.
• Large year-over-year income swings without explanation.
• Not reporting income from side gigs, cash jobs, or platforms like Upwork and Fiverr.

Keep in mind the IRS often checks business bank accounts, payment app records, and third-party reports to verify income.

Concerned About Audit Risks? Schedule a Consultation With Our Experienced Florida Tax/IRS Attorney

Being self-employed means more control over your career, but also more responsibility when it comes to paying taxes. If the IRS has contacted you, you’ve missed estimated payments, or you want to be proactive about compliance, getting trusted legal guidance can help protect your income and business.

As a licensed attorney, CPA, and former Special Agent on tax cases for the FBI, Ronald Cutler has over 50 years of experience handling complex state and federal tax matters. To ensure you are in compliance with IRS requirements and avoid audits and tax penalties, contact our office to request a consultation with our Florida tax/IRS attorney today.

Sources:

irs.gov/businesses/small-businesses-self-employed/self-employment-tax-social-security-and-medicare-taxes

irs.gov/faqs/estimated-tax/individuals/individuals-2

kiplinger.com/taxes/irs-audit-red-flags-for-self-employed