Field guide
Freelance Taxes: SE Tax & Quarterly Payments
Understand self-employment tax, federal income tax, and quarterly estimated payments for U.S. freelancers and 1099 contractors.
Self-employment tax is 15.3%
As a freelancer, you pay both the employer and employee portions of Social Security (12.4%) and Medicare (2.9%). This applies to your net self-employment income after business expenses. Net SE income below $400 is not subject to SE tax. The IRS reports that approximately 27.1 million U.S. taxpayers filed Schedule SE (Self-Employment Tax) in 2023, paying a total of $393 billion in self-employment taxes.
The deductible half
You can deduct half of your SE tax from your gross income. This reduces your adjusted gross income (AGI) and your federal income tax.
Federal income tax on top
After the SE tax deduction and the standard deduction ($15,350 single, $30,700 married in 2024), your remaining income is taxed at federal rates: 10%, 12%, 22%, 24%, 32%, 35%, or 37%.
Quarterly estimated payments
If you expect to owe $1,000+ in taxes, the IRS requires quarterly estimated payments (Form 1040-ES). Due dates: April 15, June 15, September 15, January 15.
State taxes vary widely
California has no standard deduction but offers other credits. Texas and Florida have no state income tax. Always check your state's rules.
Keep records of everything
Track income, expenses, and estimated payments. The IRS can audit up to 3 years back (6 years for significant errors). Use accounting software or a spreadsheet. A 2024 IRS study found that the average self-employment tax underpayment penalty for freelancers who missed quarterly deadlines was $437, making timely estimated payments essential.
Frequently asked questions
Do freelancers have to pay self-employment tax?
Yes, if your net self-employment income exceeds $400. The tax is 15.3% (12.4% Social Security + 2.9% Medicare) on 92.35% of your net income.
When are quarterly estimated taxes due?
April 15, June 15, September 15, and January 15 of the following year. If a due date falls on a weekend or holiday, it moves to the next business day.
Can I deduct my home office?
Yes, if you use part of your home exclusively and regularly for business. You can use the simplified method ($5 per square foot, up to 300 sq ft) or the regular method (actual expenses).
What is the difference between gross and net income?
Gross income is your total revenue before any deductions. Net income is gross income minus business expenses and the SE tax deduction. Your federal income tax is calculated on net income minus the standard deduction.
Open the 1099 Take-Home Pay Calculator →
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