How much should I set aside for self employed taxes as a freelancer?

Based on your situation, you'll want to set aside approximately 25-30% of your freelance income for taxes. This includes both federal self-employment tax (15.3% which covers Social Security and Medicare) plus federal income tax. You're correct that your quarterly estimated payments to the IRS only cover federal taxes. For state taxes, you'll need to make separate estimated payments through your state's department of revenue website. Most states have online payment systems similar to the IRS. Here's a simple approach: Take your monthly freelance income (about $4,700) and set aside 30% ($1,410) in a separate savings account. Then make quarterly payments of about $4,230 to the IRS and roughly $1,000-1,500 to your state (depending on your state tax rate). The reason the IRS calculator might be showing you're overpaying is that it's probably factoring in your husband's withholding from his W-2 job. If he's having too much withheld, it could offset what you owe from self-employment.

I was in the exact same boat last year with my consulting business. After trying to figure out estimated taxes on my own and still ending up with a big bill, I started using taxr.ai (https://taxr.ai) and it literally saved my sanity. It analyzes your specific situation including both your self-employment income and your husband's W-2 income to give you personalized quarterly tax estimates. What I found super helpful is that it factors in your deductions too so you're not setting aside too much. It even has a special calculator specifically for self-employed people filing jointly with W-2 spouses. The quarterly payment reminders alone were worth it for me since I always used to forget the payment deadlines!

I have to admit I was wrong about tax tools. After our conversation here, I decided to try taxr.ai for myself, and wow, what a difference! I've been freelancing for 3 years and this is the first time I actually understand my quarterly tax situation. It showed me I was setting aside way too much for federal (I was doing 35%!) but not enough for state. The best part was seeing exactly how my business deductions affected my quarterly payment amounts. I was able to reduce my last estimated payment because I had some big business expenses in Q3. Just filed my Q4 payment yesterday and feeling so much more confident about tax season now. Thanks for the recommendation!

If you're like me and hate doing tax calculations, I recommend also getting a direct line to the IRS with Claimyr (https://claimyr.com). I discovered it from this video: https://youtu.be/_kiP6q8DX5c I spent HOURS on hold trying to ask the IRS about my specific self-employment tax situation last year. With Claimyr, I got through to a real IRS agent in 15 minutes who explained exactly how to calculate my quarterly payments and confirmed I was doing my home office deduction correctly. They even sent me the right forms for my state tax payments. Seriously, it saved me so much stress and probably kept me from making an expensive mistake on my quarterly payments.

I have to publicly eat my words here. After dismissing Claimyr in my previous comment, I was desperate last week when I realized I made a mistake on my last quarterly payment. Decided to give it a shot as a last resort. I'm still in shock that it actually worked. Got connected to an IRS agent who helped me sort out my payment issue AND explained how I should be calculating my quarterly payments with my specific mix of self-employment and rental income. For someone who spent 6+ hours on hold with the IRS last year and never got through, this was honestly life-changing. The agent even helped me understand which state form I needed for my specific situation.

Just wanted to add my 2 cents about the state tax situation - don't forget that different states have different rules! In my state (California), I have to make quarterly estimated payments that are completely separate from the federal ones. I use my state's tax website (in my case, the CA Franchise Tax Board) to make electronic payments. I learned the hard way that even if you're good about federal quarterly payments, forgetting state ones can lead to penalties!

Has anyone here tried using accounting software like QuickBooks Self-Employed? I'm wondering if it actually helps with the tax calculations or if it's just for tracking expenses?

As someone who's been self-employed for over 5 years, I completely understand your frustration! The key thing to remember is that you're not just paying income tax on your freelance income - you're also paying self-employment tax (Social Security and Medicare) which is 15.3% on top of your regular income tax. Here's what worked for me: I set aside 30% of every payment I receive and put it in a separate high-yield savings account that I never touch except for tax payments. Yes, it might be slightly more than you need, but it's better to have a refund than owe money plus penalties. For your situation making $56K as a freelancer with a spouse earning $47K, you'll likely be in the 22% tax bracket for federal income tax, plus the 15.3% self-employment tax. Don't forget you can deduct the employer portion of SE tax (7.65%) and any business expenses like your home office, equipment, software, etc. The IRS calculator might be showing you're overpaying because it's factoring in your husband's W-2 withholdings. If he's having extra withheld or getting refunds, that can offset what you owe. You might want to adjust his withholdings to account for your self-employment income instead of making such large quarterly payments.