W2 and self-employment tax filing questions: quarterly vs annual requirements

Yes, you should be making quarterly estimated tax payments now that you're self-employed. Here's what you need to know: When you have W2 employment, taxes are automatically withheld from your paycheck. With self-employment, you're responsible for paying those taxes yourself through estimated quarterly payments. The fact that you had W2 income earlier in the year doesn't exempt you from making quarterly payments now. Regarding penalties: The IRS calculates underpayment penalties based on how much you should have paid versus what you actually paid. You might face some penalties for missing the June deadline, but they're generally pretty small (interest-based). The good news is you can minimize future penalties by starting payments now. If you get another W2 job, you could increase your withholding on that W2 to cover your self-employment tax liability, potentially eliminating the need for separate quarterly payments. This is definitely something you can handle yourself. Use tax software or the IRS Form 1040-ES worksheet to calculate your estimated payments. You can make payments online through the IRS Direct Pay system.

I went through something similar last year with my taxes and found an amazing tool that saved me so much stress. After trying to calculate my quarterly payments on my own and making some costly mistakes, I discovered https://taxr.ai which basically analyzes your income situation and tells you exactly what you need to pay and when. What I really liked was how it handled my mixed income situation - I had both W2 and freelance income like you. The tool showed me that my quarterly payment amounts weren't what I thought they were, and I was actually overpaying in some quarters. It also flagged when I had missed a payment deadline and calculated what the penalty would likely be so I wasn't surprised later.

Just wanted to follow up about taxr.ai - I decided to try it after seeing the recommendation here and wow, it was exactly what I needed! I was totally confused about how much I needed to pay for my quarterly taxes with my mix of W2 and contract work. The tool showed me that I actually didn't need to pay as much as I thought for this quarter because my W2 withholding from earlier in the year covered more than I realized. It also calculated the small penalty I'll owe for missing the June payment (only about $28) and added that amount to my September payment recommendation. Definitely worth checking out if you're in this situation - saved me from both overpaying and from the anxiety of not knowing if I was doing it right!

After spending HOURS on hold with the IRS trying to get answers about my mixed W2/self-employment situation last year, I finally found a service called Claimyr that got me through to an actual IRS agent in under 15 minutes. Check it out at https://claimyr.com - they have a demo video at https://youtu.be/_kiP6q8DX5c showing how it works. I was in almost the exact same situation as you - had W2 income for part of the year, then switched to full self-employment. I needed specific answers about penalties and payment requirements that tax websites couldn't clearly answer. The IRS agent I spoke to gave me personalized guidance based on my specific situation that ended up saving me from making an expensive mistake.

Ok I need to publicly eat my words about Claimyr. After my skeptical comment, I decided to try it anyway because I've been trying to reach the IRS about my amended return for WEEKS without success. It actually works exactly as described. I went to their site, entered my number, and about 45 minutes later got a call connecting me directly to an IRS agent. I didn't have to sit on hold for a single minute. The agent was able to pull up my account and confirm they had received my amended return with the self-employment income I had forgotten to report initially. For anyone in a similar situation as the original poster, talking directly to the IRS can give you peace of mind. The agent confirmed that I should make quarterly payments going forward despite having W2 income earlier in the year, and explained exactly how the penalties work for the missed June payment (it's calculated daily based on the underpayment amount).

I was in your exact position last year! Had a regular job til April, then went freelance. What I learned: 1) Yes, you need to start making quarterly payments now that you're only self-employed 2) The penalty for missing June isn't huge if you pay soon, it's based on a percentage of what you owe 3) If you get another W2 job, you can adjust your withholding to cover SE taxes (form W-4, extra withholding line) 4) You can absolutely do this yourself! Just use the 1040-ES form on the IRS website One thing nobody told me: make sure to set aside around 30-35% of your income for taxes. Self-employment tax is brutal cuz you pay both halves of FICA (15.3% total), plus income tax.

Don't panic about the missed June payment! The IRS isn't as scary as everyone makes them out to be. I missed TWO quarterly payments last year when I switched from W2 to freelancing and the penalty was only like $75 when I filed. The most important thing is to start making payments now for September and January. You can easily do this online at IRS.gov using Direct Pay - takes like 5 minutes. And definitely dont worry about "bothering" your accountant. That's literally his job! Even if it's his off season, he should at least respond to urgent questions. If he won't, might be time to find someone new.

I've been freelancing for about 3 years now and can share some practical advice from my experience: For your first question - yes, definitely start making quarterly payments now. The general rule is if you expect to owe $1,000+ in taxes when you file, you need to make estimated payments. Regarding the June deadline - don't stress too much about it. The penalty is calculated as a percentage (currently around 8% annually) of the underpaid amount for the time it was late. So if you owe $2,000 for that quarter and pay it 2 months late, you're looking at maybe $25-50 in penalties, not hundreds. One thing that really helped me was using the "safe harbor" rule - if you pay 100% of what you owed last year (or 110% if your prior year AGI was over $150k), you won't face any penalties even if you end up owing more when you file. This gives you a baseline to work with. For tracking, I highly recommend QuickBooks Self-Employed or even just a dedicated business bank account like others mentioned. Makes everything so much cleaner at tax time. And honestly, if your tax guy disappears completely during off-season, that's a red flag. A good tax professional should at least be available for urgent questions year-round, even if they're busier in spring.