Question

How much of my freelance income should I put aside for freelance income tax?

Answer

To figure your estimated freelance income tax, you must estimate these items for the new year:

  • Adjusted gross income (AGI)
  • Taxable income
  • Income taxes
  • Self-employment taxes
  • Deductions
  • Credits

Use your prior-year return as a guide. Adjust the amounts in each category, including freelance income tax, for changes you expect in the coming year. Your income minus deductions and credits will be your taxable income for the year.

Based on your filing status and age, check the tax tables against your estimated taxable income for the year. This will determine your estimated tax liability.

Divide your estimated tax liability into four estimated payments to be made each quarter. This assumes you’ll receive the income evenly throughout the year. If your income changes during the year, you should recalculate each quarterly payment based on the new amounts.

Related Topics

Related Resources

IRS May Start to Tax Your Account in the Caymans

Have you ever thought about investing in a Cayman Islands tax haven? Before opening an account, or making adjustments to an already existing account, review these tax tips.

When Do Children Pay Taxes On Investment Income?

How much investment income can children earn before paying taxes? Learn more from the tax experts at H&R Block.

Special Cases – Mutual Funds

Learn more about receiving a short-term mutual funds loss, from the tax experts at H&R Block.

Taxes on Savings Bonds – Form 8815 & More

Learn more about taxing interest on savings bonds and education savings bond rules with the tax experts at H&R Block.