Estimate quarterly self-employment taxes. Know exactly how much to set aside from every payment so tax season never catches you off guard.
Freelancers pay 15.3% SE tax on net earnings (Social Security 12.4% + Medicare 2.9%), plus income tax on top. The good news: you can deduct half of SE tax as a business expense, and deduct all legitimate business expenses from gross income before tax is calculated.
US estimated tax deadlines: April 15, June 15, September 15, January 15. Missing payments incurs IRS penalties of 0.5% per month — always pay on time.
Qualified Business Income (QBI) deduction allows eligible freelancers to deduct 20% of net self-employment income. Significant tax savings for most freelancers under $182,050.
A safe rule: set aside 25–30% of every freelance payment into a separate tax account. Transfer immediately upon receipt — don’t rely on willpower at tax time.
Home office, equipment, software, professional development, health insurance premiums, retirement contributions (SEP-IRA up to 25% of net earnings). Track everything.