Thank you for bringing this up! I didn't even think about quarterly payments. How do I figure out how much to pay each quarter? Can I just divide my expected tax by 4? And do I need to make quarterly payments for both the income tax AND the self-employment tax portion?

You can use Form 1040-ES to calculate your estimated tax payments. It's not always as simple as dividing by 4, especially if your income isn't steady throughout the year, but that's a reasonable starting point if your freelance income is fairly consistent. Yes, your quarterly payments should cover both the income tax and self-employment tax. The IRS doesn't distinguish between them for estimated payments - they just want the total tax paid throughout the year. Another option is to increase your W-2 withholding by submitting a new W-4 to your employer, which can sometimes be easier than managing separate quarterly payments.

This is great advice. I've been freelancing for years and I automatically transfer 30% of every payment I receive into a separate "tax savings" account. It's actually been more than I needed most years, which means I get a little bonus after filing!

Thanks for the tip! I'm definitely going to start doing this. I have a few more freelance projects lined up and I hadn't been setting anything aside. Is that 25-30% a good rule of thumb even for smaller amounts like mine? I'm worried since my regular job already puts me in a higher tax bracket.

2 What about someone who does both administrative work AND some creative work for the same organization? My situation is that I handle admin stuff for a theater company but occasionally also do some set design. Should I use two different codes or pick the one that represents most of my work?

5 You should use the code that represents the primary activity that generates the most income. If the admin work is 80% of what you do and the creative work is 20%, use the admin code (561110). If the activities are truly split close to 50/50, you could consider filing two separate Schedule Cs, each with its own code. The key thing is to accurately report all income. Having two Schedule Cs is perfectly legitimate when you have two distinct business activities, but it does mean more paperwork since you'll need to carefully allocate expenses between the two businesses.

10 I used FreeTaxUSA last year for my husband's contracting work (he's a web designer). Their NAICS selection interface is clunky but it doesn't really matter. You can override their suggestions and input the code directly if you know which one you want to use. We've never had issues with the IRS questioning our code selection.

Yes! This happened to me with a retirement distribution. Had to submit the same explanation and documents twice. Second time I included copies of their own acceptance letter from the first time. Ridiculous waste of everyone's time.

That's so frustrating! I think I'll do what you did and include their previous acceptance letter. I saved everything from last time thankfully. Wonder if this is happening a lot because of their backlog - like the left hand doesn't know what the right is doing. At least I know what documents to send now.

This is really encouraging, thank you! I did include copies of both W-2s and the corrected one with my response. I didn't think to get a letter from my employer though - that's a great idea. I'll reach out to our HR department tomorrow and see if they can provide something on company letterhead explaining the payroll switch. I've been checking my online account but so far no updates. Sounds like I just need to be patient and wait out the 4+ months. Stressful, but at least I know I've done everything right.

I used IRS Free File with FreeTaxUSA last year with both W-2 and 1099 income. It worked pretty well and handled my Schedule C without issues. The federal filing was completely free, and I only paid like $15 for state filing. Way cheaper than TurboTax which wanted to charge me $120+ for self-employment income.

Oh no, I definitely haven't made any quarterly payments. I had no idea I needed to do that. How bad are these penalties usually? Is there any way to avoid them at this point?

Unfortunately, there's no way to completely avoid the penalties now for 2023 since those quarterly payments should have been made throughout last year (typically due in April, June, September, and January). The penalty is basically interest on the amount you should have paid. For perspective, the penalty rate is currently around 8% annually, so if you should have been paying roughly $3,000 each quarter ($12,000 total for the year), the penalty might be around $500-800 depending on how late each payment was. Not catastrophic, but definitely an unnecessary expense.

Thank you so much! I didn't even think about an FSA. My employer does offer one during open enrollment which starts next month actually. This could really help if I need any follow-up work or for my regular cleanings next year. Do you know if there's any way to get tax help for the crown I already paid for this year though? Or am I just stuck with the full cost since it sounds like itemizing won't help me?

I'm glad your employer offers an FSA! Definitely consider signing up during open enrollment. Most plans allow you to contribute up to $3,050 for 2025, which can save you hundreds on planned dental work. For the crown you already paid for this year, unfortunately, the options are limited. Since itemizing likely won't exceed your standard deduction, the traditional tax deduction route probably won't help. One possibility to explore: check if your employer offers any hardship assistance programs. Some companies have employee relief funds for unexpected medical expenses. It's worth asking your HR department. Otherwise, if the cost is causing financial hardship, you might try negotiating a payment plan with your dental office if you haven't paid in full yet.

Those medical credit cards can be dangerous though. If you don't pay off the ENTIRE balance before the promo period ends, they usually charge retroactive interest on the original amount at like 25-29%! My friend got destroyed by this when she couldn't quite pay off her dental work in time.