Freelancer tax guide
Self-Employment Tax and Quarterly Estimated Payments Explained
Self-employed people may owe both income tax and self-employment tax. Because no employer may be withholding those amounts, quarterly estimated payments can be needed during the year.
9 min read · Educational guidance
Key takeaway: Enter net business profit after eligible expenses, keep estimated payments separate from revenue, and plan for self-employment tax in addition to income tax.
Profit is different from revenue
Revenue is money received before expenses. Net profit generally reflects business income after eligible ordinary and necessary expenses and is the more useful starting point for a Schedule C estimate.
Do not enter the same income as both wages and self-employment income, and do not deduct personal spending as a business expense.
Example: A freelancer with $62,000 of revenue and $17,000 of eligible business expenses starts with approximately $45,000 of net profit.
Related: Estimate a refund from your W-2 →
What self-employment tax covers
Self-employment tax generally covers Social Security and Medicare for people who work for themselves. The headline rate is 15.3%, but the statutory calculation applies it to a defined portion of net earnings and observes the Social Security wage base.
Income tax is calculated separately. A person can owe self-employment tax even when deductions and credits reduce federal income tax.
Example: Assume $45,000 of net business profit, no W-2 wages and earnings below the Social Security wage base. The simplified self-employment-tax base is $41,557.50 ($45,000 × 92.35%), and 15.3% of that is about $6,358.30. Income tax and state tax are separate.
Related: Federal vs. state refunds →
Use the USA calculator step by step
Enter W-2 wages only in the wages field and Schedule C-style net profit only in self-employment income. Add federal estimated payments to federal tax already paid and state estimated payments to the selected state's tax already paid. Do not put quarterly payments in an income or expense field.
The calculator estimates federal income tax, self-employment tax and a simplified resident-state income tax, then compares those liabilities with the payments entered. It does not model the deductible part of self-employment tax, the qualified business income deduction, self-employed health-insurance or retirement adjustments, every credit, local tax, multi-state allocation, annualized-income instalments, penalties or interest.
- ✓ Reconcile business revenue and allowable expenses
- ✓ Enter the resulting net profit once
- ✓ Add W-2 wages separately when applicable
- ✓ Enter confirmed federal and state payments in their matching fields
- ✓ Review federal tax, self-employment tax and state tax as separate lines
Example: If the business example has $45,000 of net profit and $7,000 of confirmed federal estimated payments, enter $45,000 as self-employment income and $7,000 as federal tax already paid. Do not subtract the $7,000 from profit.
Related: 2026 Child Tax Credit →
How estimated payments affect a refund
Estimated payments are prepayments credited against the return, similar in purpose to withholding. They do not reduce business profit.
The IRS generally expects taxpayers to pay tax as income is earned. Most taxpayers avoid an estimated-tax penalty when the balance after withholding and credits is under $1,000, or when payments meet the applicable current-year or prior-year safe-harbour test. Use Form 1040-ES and current IRS guidance because higher-income, farmer, fisher and uneven-income rules can differ.
- ✓ Track federal estimated payments
- ✓ Track state estimated payments separately
- ✓ Save payment confirmations
- ✓ Recalculate after a major income change
Frequently asked questions
Do I enter revenue or profit?
Enter net self-employment income after eligible business expenses.
Does the tool include quarterly payments?
Enter federal estimated payments with federal tax already paid and state payments with state tax already paid.
Is self-employment tax the same as income tax?
No. It funds Social Security and Medicare and is calculated separately from income tax.
Where do I enter quarterly estimated payments?
Add confirmed federal payments to federal tax already paid and confirmed state payments to the selected state's tax already paid. Do not deduct either payment from business profit.
Official sources and important note
- IRS Self-Employed Individuals Tax Center
- IRS estimated taxes
- IRS Form 1040-ES
- IRS Topic 554: Self-employment tax
- IRS Publication 505: Tax Withholding and Estimated Tax
General educational information only, not personal tax advice. Confirm your position with the IRS, your state tax agency or a qualified tax professional.