Do I need to pay taxes on a W-9 form? Freelancer tax questions

Thanks for explaining! So if I get the full $3,800, when exactly do I need to pay taxes on it? Do I wait until tax time next year or do I need to do something sooner? And what's this about quarterly payments? That sounds complicated.

If this is your only freelance income and your total tax bill will likely be under $1,000, you can wait and pay when you file your annual tax return by April 15, 2026. However, if you'll be earning more freelance income throughout the year and expect to owe over $1,000 in taxes, you should make quarterly estimated tax payments. It's basically paying your taxes in installments throughout the year instead of one lump sum. You can use the IRS Form 1040-ES and their online payment system to calculate and submit these payments. It seems complicated at first, but it becomes routine once you get used to it. Many freelancers set aside a separate savings account specifically for taxes to make this easier.

Does it actually help with figuring out how much to set aside for quarterly payments? My biggest issue is never knowing if I'm putting too much or too little aside.

Sounds interesting but is it really any better than just using TurboTax or talking to an actual accountant? I've been burned by "tax help" tools before that ended up being super basic.

It has a specific calculator for quarterly estimated payments where you can input your expected income and expenses, and it gives you the exact amount to pay each quarter. You can update it as you earn more or have new expenses, and it recalculates everything. I used to have the same problem of either setting aside too much (which tied up cash I needed) or too little (surprise tax bill!). As for comparing to other options, I've used TurboTax for years and while it's good for filing, it doesn't give ongoing advice throughout the year. And unlike an accountant who you might talk to once or twice a year, this is available 24/7 for questions. The deduction finder tool was way more thorough than what I've experienced with regular tax software - it asked questions specific to my industry I wouldn't have thought of.

Wait, how exactly does this work? Does it just keep calling the IRS for you or something? I don't understand how anyone can get through their wait times.

Yeah right. Nothing gets you through to the IRS faster. Their hold times are literally designed to make people give up. I'll believe it when I see it.

It uses a system that continuously redials and navigates the IRS phone tree for you, so you don't have to sit there doing it yourself. When it gets through to an agent, it calls your phone and connects you directly. So instead of being on hold for hours, you just get a call when an actual human is ready to talk. The IRS deliberately understaffs their phone lines, especially during tax season. That's why the wait times are insane. But this service basically does the waiting for you, which is why it works. I was skeptical too, but after spending an entire workday trying to get through myself, I was desperate enough to try anything. I got through in 38 minutes and resolved an issue I'd been trying to handle for weeks.

Is there a minimum amount you need to earn before keeping track of all that stuff becomes worth it? I only made like $5k freelancing last year and didn't bother with any deductions.

There's no minimum amount - deductions are valuable regardless of how much you earn! Even on $5k of freelance income, proper expense tracking could easily save you $500-1000 in taxes. Think about it this way: if you use a portion of your home exclusively for work, that's a deduction. If you bought any equipment, paid for software, or used your phone/internet for business - all deductible. Those small things add up fast. Plus, getting in the habit of tracking expenses when you're earning less makes it second nature when you start earning more. I'd recommend going back and amending last year's return if you have receipts or can reconstruct your business expenses. You generally have 3 years to amend returns.

This is brilliant advice! I never thought about it but I've been handing out my SSN to clients left and right on W-9s. Definitely gonna get an EIN now. Is there any downside to using one instead of SSN?

No real downside at all! The IRS treats it the same for tax purposes. The only tiny inconvenience is that you need to keep track of your EIN, but that's way better than having your SSN floating around. Just go to IRS.gov and search for "apply for EIN online" - they have a form you can fill out and get an EIN instantly. You'll select "Sole Proprietor" as your business type unless you've formed an LLC or corporation. You don't need an actual registered business to get one. It's basically a business social security number, and using it helps establish that you're running a legitimate business, which can be helpful if the IRS ever questions your business deductions.

Omg I didn't even think about state taxes! Do I need to fill out a separate form for those too? This is getting complicated fast 😩

@Laura Lopez Don t'panic! State tax requirements vary a lot by state. Some states like Texas and Florida have no state income tax at all, while others like California have their own estimated payment requirements. You ll'want to check your state s'tax website or call their tax department to find out the rules. Most states that require estimated payments use similar quarterly deadlines to the federal system. Some states let you pay through their websites, others want you to mail checks. The good news is that if you re'already setting aside 30% of your income for federal taxes like Victoria suggested, that should cover most state tax obligations too. Just don t'forget to factor it in when you re'calculating how much to save!

This is such solid advice! I wish someone had told me about the separate accounts when I started. I made the mistake of mixing everything together and it was a nightmare trying to figure out what was business vs personal when tax time came. One thing I'd add - when you set up that business checking account, see if your bank offers automatic transfers. I have mine set to automatically move 30% of any deposit over $500 into my tax savings account. Takes the willpower out of the equation because it happens before I even see the money in my main account. Has saved me from so many "oh I'll just borrow from my tax money this once" moments that never end well! The business credit card tip is gold too. Makes expense tracking almost automatic if you use it for everything work-related.

This is incredibly helpful, thank you! I love the idea of a monthly income tracker - that sounds way more manageable than trying to figure everything out all at once. Quick question: when you say set aside $1,200-1,300 for the $3,800, is that covering both federal and state taxes? I'm in Colorado so I know I'll have state taxes too. Also, did you find it better to make estimated payments right away or wait to see if you hit that $1,000 threshold first? I'm worried about overpaying but also don't want to get hit with penalties if I mess up the timing.