Which Form Do You Fill Out for Taxes if You Do Consulting Work?

Consultants who work independently receive payment from companies not as employees but as independent contractors. The Internal Revenue Service considers independent contractors as sole proprietors and small-business owners. Even if you don't consider yourself a small-business owner, you must file your taxes as one, which requires you to file extra forms with your taxes.

Any person who earns more than $600 from one business in a year will receive a 1099-MISC from the company that remits the payment. Businesses use Form 1099-MISC to report miscellaneous income or non-employee compensation. Box 3 or Box 7 will list the payments you received throughout the year, depending on the type of work you performed. Income taxes, Social Security taxes and Medicare taxes are typically not withheld on non-employee payments, so it is your responsibility to pay taxes on these payments, which is why you must file a small-business tax return.

Because you're an independent contractor and your payer doesn't withhold income taxes, you are responsible for paying the self-employment tax. Self-employment tax includes your portion and the employer's portion of the Social Security and Medicare tax. The IRS allows you to write off the employer-equivalent portion of the tax as an adjustment to your taxable income.

Independent contractors must complete Form 1040 when reporting income from a 1099-MISC. Form 1040-EZ and 1040A don't contain fields for you to report business income. In addition, you must complete Schedule C, which reports your income and expenses. After you subtract your income from your expenses, you arrive at your net income or net loss, which you report in the "Business Income or Loss" line in the "Income" section on Form 1040. To calculate your self-employment tax, you must complete Schedule SE. Enter your total tax in the "Self-Employment Tax" line in the "Other Taxes" section on Form 1040. Report the employer-equivalent portion in the line labeled "Deductible Part of the Self-Employment Tax" in the "Adjusted Gross Income" section.

Small-business owners who expect to owe more than $1,000 in taxes at the end of the year are required to pay estimated taxes. The IRS uses estimated tax to pay your self-employment tax and tax on your income. To estimate your taxes, you must complete Form 1040-ES and make estimated payments by April 15, June 15, Sept. 15 and Jan. 15 of each year. Each payment consists of one-fourth of the taxes due for the year. If you or your spouse has a wage job that withholds taxes, you can avoid having to pay estimated taxes by withholding an extra amount to cover the tax.