Hey Lykkers, let's talk about the not-so-glamorous side of being your own boss. You've nailed a great month, the payments are hitting your account, and you're feeling that freelance freedom. But right now, a little bit of that money you're celebrating isn't really yours.

It belongs to the tax authorities, and if you don't send it to them four times a year, you're setting yourself up for a massive, stressful bill—plus penalties—next April.

Welcome to the gig economy’s hidden tax bill. Unlike traditional employees, where taxes are withheld automatically, freelancers and contractors are responsible for calculating and paying their own taxes quarterly. Miss this, and you turn tax season from a paperwork hassle into a financial crisis. Let's build your simple, stress-free quarterly calculator.

Why You Can't Just Wait Until April

As a freelancer, the IRS and your state expect you to pay your income and self-employment taxes as you earn money throughout the year. This is done through Estimated Quarterly Tax Payments.

If you owe more than $1,000 when you file your annual return, the IRS can charge you penalties and interest for underpayment.

Your 4-Step Quarterly Tax Calculator (Grab a Notebook)

You don't need fancy software to start. Follow this framework every quarter.

Step 1: Tally Your "Taxable" Income

For the last three months, add up all payments from clients. This is your gross income. Now, subtract your deductible business expenses (software, home office costs, mileage, supplies). What's left is your net profit or taxable income for the quarter.

Step 2: Calculate the Self-Employment Tax

This is the big one. As your own employer, you pay both the employee and employer share of Social Security and Medicare (15.3% total). The formula is:

Net Profit x 92.35% x 15.3% = Your Self-Employment Tax

(The 92.35% is an IRS adjustment). Set this amount aside.

Step 3: Calculate Your Income Tax

Estimate your total year-end income, then use the current year’s tax brackets to estimate your likely income-tax amount. For a simple starting rule, many freelancers set aside a percentage of profit each time they get paid. Joy Lutz writes, “Total recommended range: 25–35% of profit.”

Step 4: Do the Math and Pay

Add the amounts from Step 2 and Step 3. This is your total estimated tax payment for the quarter.

Quarterly Payment = (Estimated Income Tax) + (Self-Employment Tax)

Divide this by 4 if you're doing equal payments, or pay the calculated amount for that specific quarter if income fluctuates.

Payments are due:

Q1: April 15

Q2: June 15

Q3: September 15

Q4: January 15 (of the following year)

Pay directly via the IRS Direct Pay portal or the EFTPS system.

Pro Moves: Smoothing Out the Bumps

1. Open a Separate "Taxes" Savings Account: The moment a client pays you, transfer your estimated tax percentage (that 25-30%) into this separate account. Out of sight, out of mind, and safe from spending.

2. Deduct, Deduct, Deduct: Every legitimate business expense lowers your taxable profit. Track receipts meticulously.

3. Use Form 1040-ES: The IRS provides this worksheet to help formalize your calculations once you're comfortable.

What This Means for You, Lykkers

Mastering quarterly taxes is the ultimate act of professionalizing your hustle. It transforms you from someone just doing gigs into a savvy business owner.

Start now: If you haven’t been doing this, calculate what you likely should have paid for the past year and consider making a catch-up payment to reduce penalties. Embrace the rhythm by scheduling a quarterly “Finance Friday” to run the numbers. Knowing the money is set aside lets you enjoy your hard-earned profit with less stress.