The Freelancerโs Guide to Estimated Taxes: How Much Should You Set Aside?
If you're 1099 or self-employed, nobody withholds taxes for you. That means you're responsible for estimated taxes. This guide helps you decide how much to set aside for quarterly payments and avoid IRS surprises.
Calculate your quarterly taxes
Use Freelance Hub to estimate self-employment tax, income tax, and quarterly payments.
Why estimated taxes matter for freelancers
As a freelancer, you pay both income tax and self-employment tax. The IRS expects you to pay quarterly. If you wait until April, you may owe penalties.
How much should you set aside?
A simple starting rule is to save 25% to 30% of net profit. High earners or high-tax states may need 35%+. Adjust for deductions, retirement contributions, and healthcare premiums.
Example: $8,000 monthly profit ร 30% = $2,400 set aside for taxes.
Safe harbor rules to avoid penalties
- โข Pay 90% of your current-year tax, or
- โข Pay 100% of last year's tax (110% if your AGI is $150k+).
If you meet safe harbor, you can avoid penalties even if you owe more at filing time.
A simple quarterly workflow
- โข Set aside a tax percentage after each payment.
- โข Track net profit monthly to update your estimate.
- โข Make quarterly payments in April, June, September, and January.
Anand Godar
Financial engineer and founder of QuantCurb. Former fintech data scientist building institutional-grade calculators for everyday wealth decisions.
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