What is Self-Employment Tax?
When you work as a W-2 employee, your employer pays half of your Social Security and Medicare taxes (7.65%), while the other half is automatically withheld from your paycheck. As a freelancer or 1099 contractor, you are both employer and employee—meaning you are responsible for the full 15.3% Self-Employment Tax in addition to standard income taxes.
The 4 Quarterly Tax Deadlines
The IRS requires freelancers who expect to owe more than $1,000 in annual taxes to make estimated payments four times a year:
How Much Should You Set Aside?
A reliable rule of thumb is setting aside 25% to 30% of every incoming client payment into a separate tax savings account. On our home page calculator, you can adjust your Estimated Tax Percentage slider to automatically deduct tax liabilities prior to computing your monthly take-home salary.
Test Your Tax Set-Aside Percentage
Adjust tax sliders and see instant net income projections.