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IRS Publication 334 is the official tax guide the Internal Revenue Service publishes for sole proprietors and independent contractors. It covers the federal tax rules that apply when you report self-employment income and deductions on Schedule C of your Form 1040. If you run your own business as an individual without a corporate structure, this is the primary reference document that governs how you file.
The IRS updates Publication 334 annually. The 2025 edition covers the tax year 2025 return and includes a "What's New" section summarizing changes in law or rates that affect your filing.
Publication 334 applies to two categories of taxpayers. Sole proprietors are individuals who own and operate a business without incorporating it. Statutory employees are workers classified as employees for Social Security tax purposes but as self-employed for income tax purposes, such as certain full-time traveling salespeople and home workers.
The publication does not cover corporations, partnerships, farming operations, or rental income. Separate IRS publications handle each of those business structures.
Every sole proprietor files Schedule C (Profit or Loss from Business) as an attachment to Form 1040. You report your gross business income, subtract allowable deductions, and arrive at net profit. That net profit flows to your personal return as taxable income and also forms the basis for your self-employment tax calculation.
Publication 334 walks through every line of Schedule C, explaining which categories of income count and which deductions you can legitimately claim.
When you are self-employed, you pay both the employer and employee shares of Social Security and Medicare taxes. For 2025, that rate is 15.3% on the first $176,100 of net self-employment earnings, then 2.9% on amounts above that. You can deduct half of your self-employment tax when calculating your adjusted gross income.
Publication 334 devotes a full chapter to self-employment tax because many new sole proprietors are surprised to discover they owe it on top of regular income tax.
Publication 334 covers two primary accounting methods. Under the cash method, you report income when you actually receive it and deduct expenses when you pay them. Under the accrual method, you report income when you earn it and deduct expenses when you incur them, regardless of when cash changes hands.
Most sole proprietors use the cash method because it is simpler. Your choice of method affects your timing of income recognition and can have significant tax planning implications, particularly in your first and final years of business.
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