IRS Category A + B: Complete Guide for Those Combining Salary and Freelance Income

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Salary and Freelance Income: A Sensitive Tax Profile

Those who combine employment (Category A) with freelance work (Category B) have one of the most sensitive tax profiles in the IRS system. A single wrong field can mean paying more than you should - or receiving a smaller refund than you are entitled to.

What Is Each Category?

Category A - Employment Income

Salary, holiday and Christmas allowances and other compensation paid by the employer. Withholdings are made monthly by the employer and the Tax Authority already has access to this data - but you should always verify the pre-filled information.

Category B - Self-Employment Income

Green receipts, isolated acts, commercial or industrial activity. May or may not have withholding tax. The taxable income depends on the coefficient applied - it does not match the invoiced amount.

Declaration Flow - Step by Step

Cover page - Household data, marital status, joint or separate taxation option (always simulate both!) and list of annexes.

Verify Annex A - Check gross income (code 401), withholdings, SS contributions and union dues.

Fill in Annex B - Declare income in the correct field of Table 4, verify withholdings in Table 6 and evaluate the Cat. A option in Table 5.

Verify Annex SS - Mandatory if you had an open freelance activity in 2025.

Correct expenses - Annex H - For misclassified e-fatura expenses or tax benefits.

Simulate on the Tax Portal - Test at least 2 scenarios before submitting.

Simplified Regime Coefficients

IRS Jovem - What Changes with Cat. A + B?

The progressive exemption can cover both salary and freelance income:

1st year: 100% exemption

2nd–4th year: 75%

5th–7th year: 50%

8th–10th year: 25%

Common Mistakes to Avoid

Omitting income from either category

Wrong field in Table 4 of Annex B

Opting for Cat. A without meeting the single-entity requirement

Not submitting Annex SS when mandatory

Not simulating joint vs. separate taxation

Interactive Guide

We created a complete interactive guide with simulator, dynamic checklist, detailed FAQ and coefficient tables.

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This article is for informational purposes only. For personalised advice, contact Grupo Your.

IRS filing deadline: 1 April to 30 June 2026.

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