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Your self-employed quarterly payment carries two taxes: federal income tax, plus the 15.3 percent self-employment tax for Social Security and Medicare. A W-2 job splits Social Security and Medicare with an employer. On your own, the full 15.3 percent is yours, which is why the first invoice you keep in full turns into a bigger tax bill than you expected. That combined weight is what this page sizes.
A W-2 employee only ever feels half of this: they pay 7.65 percent and their employer covers the matching share. Working for yourself, there's no employer to share the load, so the whole 15.3 percent is yours, and your regular income tax comes due as well. Every quarterly payment has to carry both taxes, and that combined weight is what makes self employed quarterly taxes such a shock the first year.
There's a small break built in. The self-employment tax applies to 92.35 percent of your profit rather than all of it, so the amount it's calculated on comes in a bit under your actual earnings.
To make it concrete: on $80,000 of net Schedule C profit, the self-employment tax applies to 92.35 percent of it ($73,880), at 15.3 percent, which is about $11,304. Half of that, roughly $5,652, comes back to you as a deduction against income tax. The income tax layer sits on top and depends on your bracket and any other income.
You also get half of the self-employment tax back as an above-the-line deduction. It cuts your income tax, though not the SE tax itself. So you can't just stack the two and call that your total. The first number is the scary one. Once the expenses and the half-SE deduction are in, it usually comes down to something you can plan around.
Both taxes are built on net profit: your gross business income minus your real business expenses, the figure reported on your Schedule C. Every legitimate expense you track lowers that profit, and because it sits under both taxes, a dollar of deduction is worth more to you than to a W-2 employee.
We estimate your net Schedule C profit and run both the SE tax and the income tax on it.
We add both taxes together and split the total across the four deadlines, so you know exactly what goes out on each date.
If your income swings either way, we reset the remaining payments to keep you on track rather than overpaying or falling behind.
Once you know the number, paying it on the four dates without missing one is its own system. See quarterly taxes for self employed for the schedule, the set-aside, and the payment channels.
A calculator multiplies the numbers you feed it. It will not find the expenses that shrink your profit, it will not apply the half-SE deduction in the right order, and it will not net out the Social Security tax already withheld from a W-2 job you also hold.
Taxpayers approach us after doing their taxes in TurboTax or on H&R Block or a do-it-yourself app, and they have a huge tax bill and they don’t know why they have it. They don’t know even how it came about. They sometimes don’t have the money for it.
They made doing my taxes SUPER easy and a lot less stressful.
What you pay moves with the work: one income stream is quick, several take longer, and current books speed everything up. Tell us whether you want a single calculation or quarterly support, and we will price it after a look at your income and expenses.
Send us your income so far and your business expenses, and we will size the four payments. Confidential, handled by a CPA, not a call center.
