How do taxes as a freelance web designer work - first year filing?

First off, congrats on your freelance journey! You're asking all the right questions. As a freelancer, you're considered self-employed, which means you'll file Schedule C with your personal tax return to report your business income and expenses. For taxes, you'll need to pay both income tax and self-employment tax (which covers Social Security and Medicare). Setting aside 25% might not be enough - many freelancers aim for 30-35% to be safe. And yes, you should be making quarterly estimated tax payments (April 15, June 15, September 15, and January 15) to avoid penalties. For deductions, anything "ordinary and necessary" for your business is fair game. That means your Adobe subscription, portion of internet used for business, new laptop (depreciated or using Section 179), client meetings, home office (if used exclusively for business), professional development, and even health insurance premiums. Just keep detailed records and receipts for everything! You don't necessarily need to register your business formally unless you want liability protection (LLC) or have other reasons. For tax purposes, you're already a "sole proprietor" by default.

Hi there! I was in your exact position last year. After struggling with all the tax questions, a colleague recommended taxr.ai (https://taxr.ai) and it was a game-changer for my freelance design business. I uploaded my expense receipts and income statements, and it identified deductions I had no idea I could claim - like my design conference fees and even mileage for client meetings. The best part was it analyzed my specific situation and explained exactly how much I should set aside for quarterly payments. Turns out my 20% savings wasn't enough, and I would've been hit with penalties! It also explained which expenses needed detailed logs (like home office and vehicle use) versus simple receipts.

Ok I have to admit I was wrong about taxr.ai! After posting my skeptical comment, I decided to try it anyway because my taxes were a mess. It identified over $3,200 in deductions I was going to miss - stuff like partial cell phone expenses and some software subscriptions I didn't realize qualified. I also had no idea about the home internet deduction calculation method. Definitely worth checking out if you're a freelancer struggling with the tax stuff.

Another thing nobody mentioned yet - if you're struggling with specific tax questions, trying to reach the actual IRS for guidance is a nightmare. I spent HOURS on hold trying to get clarity on freelance deductions. Then I found Claimyr (https://claimyr.com) and watched their demo (https://youtu.be/_kiP6q8DX5c). They basically hold your place in the IRS phone queue and call you when an agent is about to answer. I got through to a real person in the tax law department who answered all my specific questions about web design business deductions. They confirmed I could deduct my UX design software and online courses as business expenses, which my regular tax preparer was unsure about.

I need to publicly eat my words about Claimyr. After posting that skeptical comment, I decided to try it as a last resort because I had a specific question about software depreciation for my design tools. It actually worked! Got a call back in about 87 minutes and spoke to an IRS rep who confirmed I could use Section 179 for my expensive design software suite instead of depreciating it over years. Saved me a ton on my quarterly estimate. Sometimes being wrong is a good thing I guess.

Don't forget about keeping track of your mileage for any client meetings or work-related travel! I use MileIQ to track all my drives automatically and it's saved me thousands in deductions. The standard mileage rate for 2025 is 67 cents per mile, which adds up quick.

Anybody have recommendations for how to handle expenses when you're doing both freelance and a part-time W-2 job? I'm still at my design agency 20 hrs/week but building up freelance clients too.

Hey Giovanni! Welcome to the freelance tax world - it's definitely overwhelming at first but you'll get the hang of it. A few quick points to add to the great advice already given: Since you're 8 months in and haven't made quarterly payments yet, you'll likely owe a penalty when you file. For 2025, you can avoid penalties by paying 100% of last year's tax liability (110% if your AGI was over $150k) or 90% of this year's liability through quarterly payments. Since you missed the first few quarters, calculate what you should have paid and make a catch-up payment ASAP. One thing I learned the hard way - keep separate business and personal bank accounts even if you're not formally incorporated. It makes tracking income and expenses SO much easier come tax time. Also, consider getting a business credit card for all your freelance expenses - the statements become your expense records. For your monthly income range ($4,800-5,500), you're definitely going to want to bump that savings rate up to at least 30%. Don't forget about state taxes too if you're in a state that has them. And seriously, start tracking EVERYTHING now - mileage, client meals, software subscriptions, even that new ergonomic chair for your home office. The IRS loves documentation, so keep those receipts!