Tax & Finance Tutorials
for Freelancers

📋 How to Calculate Quarterly Taxes (Step-by-Step)

1. Estimate your net SE income: Gross freelance revenue minus deductible business expenses.
2. Calculate SE tax: Net income × 92.35% = taxable SE amount. Multiply by 15.3% for total SE tax.
3. Deduct half of SE tax: SE tax ÷ 2 = amount you deduct from gross income.
4. Calculate AGI: Net income − (½ SE tax) − other above-the-line deductions.
5. Apply standard deduction: AGI − standard deduction = taxable income.
6. Apply tax brackets: Calculate federal income tax on taxable income using IRS brackets.
7. Add SE tax: Federal income tax + SE tax = total annual tax.
8. Divide by 4: Total tax ÷ 4 = quarterly estimated payment.

📊 SE Tax Breakdown (2025)

💡 Key Facts About SE Tax

• ✅ Applies to net profit after business expenses
• ✅ Calculated on 92.35% of net income (not 100%)
• ✅ You deduct half of SE tax from your income taxes
• ✅ Includes both "employee" and "employer" FICA shares
• ✅ Different from income tax — separate line on 1040
• ⚠️ Must file if net SE income ≥ $400
• ⚠️ Applies even if you also have a W-2 job
• 📋 Filed on Schedule SE, attached to Form 1040

📋 What Every Invoice Must Include

1. Your business name & contact info (name, address, email, phone)
2. Client name & address (who you're billing)
3. Invoice number — sequential for tracking (INV-001, INV-002…)
4. Invoice date — when it was issued
5. Due date or payment terms (Net 30, Due on Receipt)
6. Itemized services/products — description, quantity, rate, amount
7. Subtotal, tax (if any), and total due
8. Payment instructions — how to pay (bank, Venmo, check, etc.)
9. Notes or thank-you message (optional but professional)

🚀 Hiring Your First Employee — Quick Checklist

1. Get an EIN (Employer Identification Number) from IRS.gov — free and instant
2. Have employee complete Form W-4 (withholding allowances) and Form I-9 (eligibility)
3. Register with your state unemployment agency (SUTA / SUI)
4. Set up EFTPS (Electronic Federal Tax Payment System) for tax deposits
5. Calculate and withhold federal income tax based on W-4 and IRS tables
6. Withhold and match FICA taxes — 6.2% SS + 1.45% Medicare each
7. Deposit taxes on time — monthly or semi-weekly depending on liability
8. File Form 941 quarterly (employer's tax return)
9. Issue W-2 forms to employees by January 31

📄 Forms You'll File (Self-Employed)

📝 Schedule C — Quick Walkthrough

1. Part I — Income: Enter gross receipts/sales (what you invoiced). Enter returns/refunds given. Line 7 = Gross profit.
2. Part II — Expenses: Enter each category (advertising, car, depreciation, insurance, legal, meals at 50%, office expense, rent, supplies, taxes/licenses, travel, utilities, wages).
3. Part III — COGS: If you sell physical products, calculate cost of goods sold here.
4. Part IV — Vehicle: If claiming car expenses, list mileage, business miles, and method used.
5. Part V — Other Expenses: Software, home office (simplified), professional fees, and anything not listed in Part II.
6. Line 31 = Net Profit or Loss: This flows to Form 1040 and Schedule SE.

📊 2025 Contribution Limits

🎯 Choosing the Right Account

• ✅ SEP-IRA: Best for high earners who want simplicity. Opens like an IRA, massive contribution room.
• ✅ Solo 401(k): Best for maximizing contributions at lower income levels. More complex but more powerful.
• ✅ Roth IRA: Best if you expect higher taxes in retirement or want flexibility. Can withdraw contributions penalty-free.
• ✅ HSA: If you have a high-deductible health plan — triple tax advantage (deductible, grows tax-free, withdrawals tax-free for medical).
• ⚡ Pro tip: Max your SEP-IRA or Solo 401(k) first (bigger deduction), then fund a Roth IRA for tax diversification.