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Estimated Taxes for Freelancers: What You Need to Know Before the IRS Comes Calling

If you're self-employed, doing contract work, or running your own side hustle, there's one thing you need to know that often gets missed—you’re responsible for your own taxes.

Unlike traditional jobs where taxes are taken out of your paycheck automatically, freelancers and consultants have to plan ahead and pay the IRS directly throughout the year. That’s where estimated taxes come in—and understanding them can save you from stress, penalties, and big tax bills down the line.

Here’s what you need to know.


estimated taxes consultation
estimated taxes consultation

What Are Estimated Taxes?

Estimated taxes are quarterly payments made to the IRS to cover your income tax and self-employment tax. If you're earning income that isn’t subject to withholding—think client payments, PayPal deposits, or 1099 income—you’re expected to pay as you go.

If you expect to owe $1,000 or more in taxes for the year, the IRS requires you to make estimated payments.


When Are They Due?

Mark your calendar with these quarterly deadlines:

  • April 15

  • June 15

  • September 15

  • January 15 (of the following year)

Missing a payment can result in penalties and interest—even if you pay everything when you file your return. Staying on schedule is key.


How Do You Calculate What You Owe?

Start by estimating your total income and subtracting any business expenses you plan to write off. Then calculate both:

  • Income Tax – Based on your tax bracket

  • Self-Employment Tax – 15.3% for Social Security and Medicare

Divide that total by four to get your quarterly payment. Tools like IRS Form 1040-ES or online calculators can help, or you can work with a professional to stay accurate.


3 Simple Ways to Stay on Track

  1. Open a Separate Business Bank Account A separate account helps you avoid mixing personal and business finances. Novo is a great option for freelancers—offering free checking with no monthly fees and built-in tools to manage your money.

  2. Set Aside Tax Reserves Every time you get paid, move 25–30% into a “tax reserve” so you’re never caught off guard when payments are due. Novo allows you to create virtual envelopes (called reserves) right inside your account.

  3. Use QuickBooks for Simple Tracking QuickBooks is a user-friendly accounting software that makes it easy to track your income, expenses, and tax obligations in one place. You can even connect it to your bank account for automatic transaction tracking—so nothing slips through the cracks.

  4. Work with an Accounting FirmInstead of guessing what you owe, let professionals like The RedHead Solutions take care of your bookkeeping, tax estimates, and filings. We make sure you stay ahead of deadlines—and the IRS.


Missed a Payment? Don’t Panic.

If you're behind, make a payment as soon as possible to minimize penalties. You can use the IRS EFTPS system or reach out to a tax pro to calculate what’s due and help you catch up. The key is to take action early and stay consistent moving forward.


Want More Help? Join Our Free Webinar!

This article is just the beginning. Join us live for our upcoming webinar:"Estimated Taxes Made Simple: What Every Freelancer & Consultant Needs to Know."You'll learn step-by-step how to calculate what you owe, set up systems that work, and avoid tax season surprises.

Can’t make it live? We’ve got you covered—watch the replay anytime.

 
 
 

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