freelancer

[LauraB17]

I am entirely new to self-employment! I started working on a freelancer project in April and haven't paid any taxes yet since I just learned about the quarterly payments. However, I've been putting away the amount of taxes I believe I will be paying on my income. What would be my steps to estimate and make income tax payments? Some links would be excellent since I really don't know what I'm doing 🙂 Thanks!!

[JandKit]

Hi LauraB17,

Thanks for this question.

It is definitely a good thing that you've put aside money for paying your taxes for the year. You did not mention if there is a 'regular' job that you are working as well. Your very first step is to calculate your taxes due for the year. Here is a link  to get you started.

Since Self-employed income is a part of your personal return, you will need to calculate the self-employed taxes that are due as well as your regular tax.

The Self-employed tax is a simple calculation that requires that you subtract :

    All income received from self-employed income minus all expenses paid for self employed work done

If the results of this is less than $400, no tax will be due on the income;

If there is a profit, this amount is multiplied by  0.1414955.

This is the SE Tax due for the year. By dividing this amounby 4, you will have estimated the estimated taxes due quarterly.

Estimated payments are made using Form 1040-ES or you can make thes payments directly to the IRS.

The dates for payments are:

Jan 1 - Mar 31, 2023 with April 18, 2023 being the deadline

Apr 1 - May 31, 2023 with June 15, 2023 bing the deadline

Jun 1 - August 31, 2023  with September 15, 2023 being the deadline

Sept a - Dec 31, 2023   with Jan 16, 2023 being the deadline