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.
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.
Related: Federal vs. state refunds →
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. Use Form 1040-ES and current IRS guidance to determine timing and whether an underpayment penalty safe harbour may apply.
- ✓ Track federal estimated payments
- ✓ Track state estimated payments separately
- ✓ Save payment confirmations
- ✓ Recalculate after a major income change
Related: 2026 Child Tax Credit →
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.
Official sources and important note
General educational information only, not personal tax advice. Confirm your position with the IRS, your state tax agency or a qualified tax professional.