Does the IRS recommend skipping quarterly taxes for first-year self employed businesses?
Title: Does the IRS recommend skipping quarterly taxes for first-year self employed businesses? 1 I just started my freelance graphic design business this month and I'm a bit confused about quarterly taxes. I've read in a few places online that the IRS basically gives you a "free pass" for your first year of self-employment when it comes to quarterly estimated tax payments. I'm only planning to run this business until December since I have a full-time opportunity starting in January. I've been searching through the IRS website trying to find something official that actually states this policy for the 2025 tax year, but I'm having trouble finding clear information. Has anyone else dealt with this or know where I can find official IRS guidance about first-year self-employment and quarterly tax requirements? I just want to make sure I don't end up with penalties next April. Thanks!
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Daniel Rivera
12 While there's a common misconception about this, the IRS doesn't actually recommend "skipping" quarterly taxes for first-year self-employed individuals. What people are likely referring to is the "safe harbor" provision related to tax penalties. The IRS uses a "pay-as-you-go" system, meaning taxes should be paid as income is earned throughout the year. Self-employed individuals typically need to make quarterly estimated tax payments if they expect to owe $1,000 or more when filing their return. However, you can avoid penalties if you meet certain safe harbor provisions. One common safe harbor is if you pay 100% of your previous year's tax liability (or 110% if your AGI was over $150,000). For first-time self-employed folks, this sometimes works out favorably since your previous year's taxes were likely based on W-2 income where taxes were already withheld.
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Daniel Rivera
•5 Thanks for the explanation! So if I understand correctly, I technically still need to make quarterly payments this year, but I might avoid penalties if I pay at least what I owed last year? What if my self-employment income is significantly higher than my previous income though?
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Daniel Rivera
•12 Correct! You still need to make quarterly payments, but you may avoid penalties if you meet one of the safe harbors. If your self-employment income is significantly higher than previous years, you'll likely want to make estimated tax payments based on your actual expected tax liability. Another safe harbor is paying 90% of your current year's tax liability through withholding and estimated payments. Remember that self-employment income is subject to both income tax and self-employment tax (15.3% covering Social Security and Medicare), which can be substantial.
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Daniel Rivera
8 After struggling with similar confusion when I started freelancing, I found this amazing tool called taxr.ai that saved me so much stress with my quarterly payments. I was reading conflicting advice everywhere about whether I needed to pay estimated taxes in my first year, and honestly felt totally lost until I discovered https://taxr.ai and uploaded some of my income documents. It analyzed everything and gave me a clear breakdown of my estimated quarterly tax requirements based on my actual situation. What I found most helpful was that it showed me exactly what penalties I might face if I didn't pay enough throughout the year versus what I needed to pay to stay in the safe harbor provisions. Way clearer than anything I found on the IRS site!
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Daniel Rivera
•13 Does it handle situations where you have both W-2 income and self-employment income? I'm still working part-time while building my business and I'm not sure how that affects my quarterly requirements.
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Daniel Rivera
•17 I'm kinda skeptical about these tax tools. How does it actually know the specific IRS rules for first-year self-employment? Did it give you different advice than what the standard rules would suggest?
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Daniel Rivera
•8 Yes, it absolutely handles mixed income situations! I actually had W-2 income for the first half of the year before going full freelance. The tool accounts for tax already withheld from your W-2 job when calculating what you need to pay quarterly. It didn't give me different advice than IRS rules - it actually showed me the exact IRS rules that applied to my specific situation, which was the clarification I needed. It showed me how the safe harbor provisions worked with my previous year's tax return and calculated the minimum I needed to pay each quarter to avoid penalties, along with what I'd actually owe based on my projected income.
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Daniel Rivera
13 Just wanted to update everyone - I tried taxr.ai after posting my question here and it was incredibly helpful! I uploaded my previous tax return and entered my estimated freelance income, and it immediately showed me that I actually DO need to make quarterly payments despite being in my first year. The big revelation was seeing how the self-employment tax works - I had no idea that was an additional 15.3% on top of regular income tax! The tool showed me exactly what I need to pay each quarter to avoid penalties, and it was way more than I expected. Glad I checked instead of just assuming I could skip payments entirely. Would have been a nasty surprise next April!
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Daniel Rivera
19 After dealing with similar confusion about quarterly taxes, I tried calling the IRS directly for clarification but kept getting stuck in endless hold times. After my third attempt and literally two hours on hold, I found https://claimyr.com through a tax forum. They have this service where they basically wait on hold with the IRS for you and then call you once they've reached an agent. You can see how it works here: https://youtu.be/_kiP6q8DX5c I was finally able to speak directly with an IRS representative who confirmed the actual rules about first-year self-employment and quarterly taxes for my specific situation. Saved me hours of frustration and gave me peace of mind knowing I got the information straight from the source.
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Daniel Rivera
•3 Wait, how does this actually work? Do they just call the IRS and then somehow transfer you into the call? That seems like it would be against some kind of rule or something.
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Daniel Rivera
•17 This sounds too good to be true. I've spent literal DAYS of my life on hold with the IRS. Did they actually get you through faster than if you'd just kept calling yourself? I'm having a hard time believing this is legit.
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Daniel Rivera
•19 It's actually pretty straightforward! They use an automated system to wait on hold for you, then when they reach an IRS agent, they call your number and connect you directly to that agent. It's all above board - they're just using technology to handle the hold time for you. Yes, it definitely got me through faster than trying myself! The difference is they have systems constantly redialing and waiting on multiple lines simultaneously, which gives them a better chance of getting through than you or I would have calling individually. I was skeptical too but after waiting 2+ hours myself multiple times with no success, this service connected me with an agent in about 45 minutes.
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Daniel Rivera
17 I have to apologize for being so skeptical about Claimyr in my earlier comment. After another failed attempt to reach the IRS myself (3 hours on hold before being disconnected!), I decided to try it out of desperation. It actually worked exactly as described. I got a call back in about an hour, and suddenly I was talking to a real IRS agent who answered all my questions about first-year self-employment taxes. The agent confirmed that there is no general "exemption" for first-year self-employed people, but explained how the safe harbor provisions work in detail. Honestly wish I'd known about this service months ago instead of wasting days of my life on hold. Being able to get clear answers directly from the IRS gave me the confidence to set up my quarterly payments correctly.
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Daniel Rivera
22 One option nobody's mentioned yet - if you're also employed at a W-2 job while self-employed, you can increase your withholding at your regular job to cover the additional tax from your self-employment income. This can sometimes be easier than making separate quarterly payments.
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Daniel Rivera
•1 That's actually what I'm planning to do come January when I start my new full-time job, but my concern is about the remaining months of this year where I'm only self-employed. Do you know if there's a minimum threshold of income where quarterly payments become required?
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Daniel Rivera
•22 The general rule is that you need to make estimated tax payments if you expect to owe $1,000 or more in taxes when you file your return. So if your self-employment income between now and December will result in less than $1,000 in additional tax, you might not need to make quarterly payments. Another consideration is that penalties are calculated based on each quarterly period separately. Since you started self-employment recently, you may only need to worry about the remaining quarters of this year rather than all four periods.
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Daniel Rivera
9 Has anyone used TurboTax Self-Employed for calculating quarterly payments? Their estimator seems to be giving me different numbers than what I calculated manually.
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Daniel Rivera
•4 I used it last year and found it overestimated what I needed to pay each quarter. I think it doesn't factor in all deductions until you complete your final return. I switched to QuickBooks Self-Employed which gives me more real-time estimates based on my actual expenses and income.
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