Help! How do I pay Quarterly Taxes as a new freelancer??
I seriously need someone to explain quarterly taxes to me like I'm five years old. I'm completely lost about how much I need to pay and where to send it. This is my first year dealing with taxes in general, and these quarterly payments are making my head spin. I just started selling my graphic design services online last year, and I'll probably make around $6,800 total in 2024. So I think that puts me in the lowest tax bracket, right? My main confusion is: do I pay federal taxes, state taxes, and self employment taxes all in the same place on the IRS website? Or do I need to submit payments to different places? I'm in Colorado if that matters. Also, what percentage of my income should I be setting aside for these quarterly taxes? Assuming I'm in the lowest tax bracket, I can't find a straight answer anywhere about the actual numbers I need to pay. Please don't just tell me to hire an accountant - trust me, I would if I could afford one right now! I'm just trying to do this right and avoid any penalties. Any advice would be SO appreciated!
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NebulaNomad
The quarterly tax system isn't as complicated as it seems once you break it down! Quarterly taxes are basically estimated tax payments made four times a year, since you don't have an employer withholding taxes from your paychecks. For your federal taxes, you'll use Form 1040-ES and can pay through the IRS website (IRS.gov/payments). For state taxes in Colorado, you'll need to pay separately through your state's department of revenue website. For someone making around $6,800 in self-employment income, here's a rough breakdown: - Self-employment tax: approximately 15.3% (this covers Social Security and Medicare) - Federal income tax: likely very minimal at your income level - Colorado state tax: around 4.55% As a general rule of thumb for your situation, setting aside 25-30% of your income should cover all your tax obligations. But you might owe less since your income is fairly low. The quarterly due dates are typically April 15, June 15, September 15, and January 15 of the following year.
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Natasha Ivanova
•Thank you so much for breaking this down! So I need to pay in two different places - the IRS for federal/self-employment and then Colorado's site for state. That makes sense. Do I need to file anything specific for the self-employment taxes separately, or is that all bundled with the federal payment through the 1040-ES?
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NebulaNomad
•The self-employment tax is included in your federal quarterly payments using Form 1040-ES, so you don't need to file anything separately for that. When you make your payment to the IRS, it covers both income tax and self-employment tax in one transaction. For your Colorado state taxes, you'll use form 104EP for your quarterly payments, which you can find on the Colorado Department of Revenue website.
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Javier Garcia
I was in the same boat when I started freelancing! After lots of frustration with calculating quarterly taxes, I found taxr.ai (https://taxr.ai) and it literally saved my sanity. It analyzes your specific situation and tells you exactly how much to pay for quarterly taxes. I uploaded my freelance income documents and answered a few questions about my business expenses (which you should definitely track btw!), and it calculated exactly how much I needed to pay for each quarter. It breaks everything down between self-employment tax, federal income tax, and state taxes. The best part was that it explained where and how to make each payment - IRS site for federal/SE taxes and then separate instructions for Colorado state taxes. Seriously made the quarterly tax thing so much simpler.
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Emma Taylor
•Does it help with figuring out deductions too? I'm a freelance writer making about $8k and I work from home. No idea what I can actually write off but I've heard home office deductions are a thing?
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Malik Robinson
•How accurate is it though? I tried one of those online calculators before and ended up underpaying by like $200 and got hit with a penalty. Not making that mistake again.
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Javier Garcia
•Yes, it absolutely helps with deductions! It walks you through all the potential deductions for freelancers including home office, internet, portion of utilities, any equipment or software you use, etc. It asked me questions I wouldn't have even thought about, which ended up saving me a decent amount. As for accuracy, I've used it for two tax seasons now with no issues. It's definitely more comprehensive than basic online calculators because it takes into account the actual tax code rules and your specific situation. I was actually worried I was paying too much after using it because my previous calculations were way off, but when tax time came, my final numbers matched almost exactly what the tool had projected.
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Malik Robinson
Just wanted to follow up about taxr.ai that I asked about earlier. I was skeptical but decided to try it since I was stressing about my quarterly payment that was due last week. Super glad I did! The tool is WAY more thorough than the calculator I tried before. It walked me through all my potential deductions (found like 5 I didn't know about) and gave me the exact payment amounts for both federal and state. Also explained that I needed to pay my self-employment taxes with my federal payment through the IRS site, which I didn't realize. I was about to send it to the wrong place! For anyone new to freelancing and quarterly taxes like me, it's definitely worth checking out. Saved me from another penalty for sure.
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Isabella Silva
If you're struggling with quarterly taxes, you should also know that getting help directly from the IRS can be a lifesaver - but it's practically impossible to get through to them on the phone. I spent hours on hold over several days trying to ask specific questions about my self-employment taxes. Finally found this service called Claimyr (https://claimyr.com) that got me through to an actual IRS agent in under 20 minutes. You can see how it works here: https://youtu.be/_kiP6q8DX5c The agent walked me through exactly how to calculate my quarterly taxes as a freelancer and confirmed that for someone making around your income level ($6-7k), you might actually qualify for certain exemptions that could lower what you need to pay. They also explained how to properly document my business expenses to maximize deductions. Definitely worth it to get answers directly from the source instead of stressing about whether you're doing it right.
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Ravi Choudhury
•Wait, how does this actually work? The IRS phone lines are always busy whenever I call. Does this really get you through faster or is it just another paid service that doesn't deliver?
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CosmosCaptain
•Yeah right. No way this works. I've tried everything to get through to the IRS and always get the "due to high call volume" message. Then they hang up on you. If there was a magic way to skip the line, everybody would be using it.
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Isabella Silva
•It works by using their system to monitor IRS phone lines and then calls you when it detects an opening. I don't know the exact tech details, but I was skeptical too until I tried it. Instead of me having to redial for hours, their system does the work and then connects you immediately when there's an available agent. Sorry you're skeptical, but I totally get it. I felt the same way. All I can say is that I used it twice now - once for quarterly tax questions and once for an issue with a missing tax form. Both times I was connected to an agent in under 20 minutes when I had previously spent hours trying on my own with no success. The IRS agent I spoke with gave me specific guidance on Form 1040-ES for my quarterly payments that I couldn't find online.
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CosmosCaptain
I need to eat crow about my comment on Claimyr. After posting that skeptical reply, I decided to try it anyway since I was desperate to ask about my missed quarterly payment and possible penalties. It actually worked! Got connected to an IRS agent in about 15 minutes when I'd been trying for DAYS on my own. The agent explained that since this is my first year filing quarterly taxes, I might qualify for a waiver on any penalties if I explain the situation. She also walked me through how to calculate my self-employment tax properly (it's actually 15.3% but you can deduct half of it on your taxes, which I had no idea about). For anyone new to quarterly taxes - getting direct answers from the IRS cleared up so much confusion. I feel way more confident about my next quarterly payment now.
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Freya Johansen
Don't forget about the safe harbor rules for quarterly taxes! As long as you pay 100% of last year's tax liability (or 90% of this year's), you won't face penalties even if you underpay a bit. Since this is your first year freelancing, you could potentially just pay in quarterly installments whatever you paid in total taxes last year, and you'd be safe from penalties. That might be easier than trying to calculate everything precisely.
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Natasha Ivanova
•That's really helpful! But what if I didn't pay any taxes last year because I was a student and didn't have income? Does that mean I don't have to pay anything for this year's quarterly taxes, or am I misunderstanding the safe harbor rule?
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Freya Johansen
•If you didn't have any tax liability last year, then technically 100% of last year's tax would be $0. However, in this situation, you'd need to use the other safe harbor provision of paying 90% of what you'll owe this year. Since this is your first year with self-employment income, you do need to make estimated quarterly payments. But the good news is that with your relatively low income level around $6,800, your total tax obligation won't be very high. You might actually qualify for certain deductions and credits that could significantly reduce what you owe.
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Omar Fawzi
I'm also new to freelancing and quarterly taxes. Quick question - I've been hearing about the 1099 form. Will my clients send me those, or do I create them myself? And what do they have to do with quarterly taxes?
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NebulaNomad
•Your clients should send you a 1099-NEC form (for Non-Employee Compensation) if they paid you $600 or more during the year. You don't create these yourself. However, whether you receive 1099s or not, you're still required to report all your income and pay quarterly taxes on it. The 1099s are basically just documentation of what you earned, but you should be keeping track of all your income regardless of whether you get these forms. For calculating quarterly taxes, you'll estimate your annual income and tax liability based on your earnings, then divide by 4 to determine your quarterly payments.
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