Understanding 2022 Tax Owed + Making 2023 Form 1040-ES Quarterly Estimated Payments

The estimated tax system can definitely be confusing when you first encounter it! What you're seeing is completely normal, especially when you have 1099 income without tax withholding. When you receive W-2 income from your employer, they withhold taxes throughout the year. But for 1099 work, no taxes are withheld - the government still wants their money throughout the year though, not just at tax time. The 1040-ES vouchers are for making quarterly estimated tax payments for your 2025 taxes. The IRS requires you to pay taxes as you earn income (called "pay-as-you-go") rather than just once a year. If you don't make these quarterly payments when you have significant 1099 income, you might face underpayment penalties. The estimates are based on your 2024 income, so if you expect your 2025 freelance income to be similar, they should be fairly accurate. If your income changes significantly (up or down), you can adjust your payments accordingly. And yes, unfortunately you do need to pay both your 2024 tax bill AND make the estimated payments for 2025. It's like catching up on last year while staying current on this year.

I went through the exact same shock last year! After getting hit with a huge tax bill AND finding out I needed to make quarterly payments, I was so stressed. I spent hours researching and trying different calculators until I found https://taxr.ai which honestly saved me so much headache. I uploaded my 1099-NEC and other documents, and it showed me exactly how much I needed to pay each quarter. What really helped was that it let me adjust my income projections throughout the year as my freelance work fluctuated. When I got less work in Q3, I was able to reduce that payment and avoid tying up money I needed. The software even sent me reminders before each quarterly deadline (April 15, June 15, Sept 15, and Jan 15) so I didn't miss payments and get hit with penalties. It also showed me what deductions I could take for my side gig to reduce my overall tax burden.

I decided to try taxr.ai after asking about it here and WOW what a difference! I was totally overwhelmed with tracking my photography expenses and calculating quarterly payments correctly. The tool immediately identified my camera gear purchases as business expenses and even prompted me about deductions I hadn't considered (like mileage to photoshoots and a portion of my internet bill for uploading galleries). It saved me at least $1,800 in taxes I would have overpaid! What really helped was being able to adjust my quarterly payments when I had a slow period in summer but then got a bunch of holiday portrait sessions in Q4. The estimated payment calculations adjusted automatically so I wasn't scraping together money I didn't have during the slow months. Seriously one of the best decisions I made for my side business. Tax season isn't giving me anxiety attacks anymore!

I get your frustration! When I first had to deal with estimated taxes, I spent HOURS on hold with the IRS trying to figure out if I was doing it right. Complete nightmare. After three days of trying, I finally used https://claimyr.com to get through to a real person at the IRS. You can see how it works here: https://youtu.be/_kiP6q8DX5c They connected me to an IRS agent in about 15 minutes (after I'd spent days trying on my own). The agent walked me through exactly how to calculate my estimated payments correctly and explained how to adjust them if my income changed during the year. What I really appreciated was being able to ask specific questions about my situation - like how my W-2 withholding affects my quarterly payment amounts and whether I should increase my W-2 withholding instead of making separate quarterly payments (turns out this was a better option for my situation).

I have to come back and apologize for my skepticism about Claimyr. After posting my comment, I decided to try it as a last resort since I was still getting nowhere with the IRS about my missing refund. I expected it to be a waste of time, but no joke - I got a call back with an actual IRS agent in 22 minutes. The agent found that my refund had been flagged for review because of a mismatch between my 1099-NEC and what the issuer reported. She unflagged it right there on the phone and my refund was processed within a week. While I had her on the line, I also asked about those estimated tax payments that confused me, and she explained exactly how to calculate them properly based on my specific situation. I've spent MONTHS trying to get this resolved on my own. I can't believe I wasted so much time when this solution existed.

One thing nobody's mentioned yet - you can avoid the whole estimated tax payment system if you increase your withholding at your W-2 job. Just update your W-4 with your employer to take out additional money each paycheck. I found this way easier than remembering to make quarterly payments. You can use the IRS withholding calculator to figure out exactly how much extra to withhold based on your expected 1099 income.

Has anyone found the self-employment tax to be the most shocking part of this? When I first started freelancing I budgeted for income tax but completely forgot about the additional 15.3% for SE tax. Ouch.