How to Estimate and Pay Taxes if You're Self-Employed

Being your own boss comes with many perks—flexible hours, creative control, and the freedom to grow something that’s yours. However, it also comes with new responsibilities, particularly regarding taxes.

We’ve helped countless self-employed individuals figure this out, and we know the process can feel confusing at first.

The good news? It doesn’t have to be. We’ll walk you through everything you need to know—from estimating your income to calculating what you owe and avoiding penalties—so you can stay compliant and focused on building your business.

Why is this different from regular taxes?

Suppose you’ve always worked a traditional job where taxes were automatically taken out of your paycheck. In that case, we understand how unfamiliar the self-employment tax system can initially feel, but you're not alone.

We’ve worked with freelancers, consultants, and small business owners making the switch—and we’ve seen firsthand how confusing it can be at first.  Here’s what you need to know:

• You’re both the employer and the employee. This means you’re responsible for paying the entire 15.3% in self-employment tax—covering both Social Security and Medicare.
• There’s no automatic withholding. Unlike a W-2 job, no one sets aside your taxes for you. It’s up to you to track what you earn, calculate what you owe, and make payments directly to the IRS on time.

It may sound like a lot, but we’ll walk you through exactly how to estimate and pay what’s due—and how to avoid any nasty surprises down the road.

Step 1: Estimate Your Annual Self-Employment Income

Before calculating your taxes, you’ll need a solid starting point: your projected annual income.

This doesn’t have to be exact—just a realistic estimate based on what you expect to earn over the year. Here’s how we recommend approaching it:

If You’re New to Self-Employment:

Look at your expected monthly income and multiply it by 12 for an annual estimate.

Not sure how much you'll earn? That’s okay—it’s better to estimate on the higher side to avoid underpaying taxes and getting penalized.

If You’ve Been in Business a While:

Review your earnings from last year, then adjust them up or down if you expect changes. For example, you're taking on more clients, raising your rates, or launching new services.

The key is to set a baseline that helps you plan, and we’ll use that number to figure out your estimated tax payments in the next step.

Step 2: Understand Self-Employment (SE) Tax

Now that you’ve estimated your income, it’s time to look at one of the biggest differences for self-employed individuals: self-employment tax, also known as SE tax.

This tax covers Social Security and Medicare contributions—the same ones your employer would normally help pay if you had a W-2 job. But since you're both the boss and the employee now, you pay the complete 15.3% yourself.

Here's the Breakdown: 

• SE tax = Social Security + Medicare 
• 12.4% goes toward Social Security
• 2.9% goes toward Medicare

We know that sounds like a lot, but here’s the good news:

When you file your annual tax return, you can deduct half of your SE tax, which reduces your taxable income. It’s the IRS’s way of slightly leveling the playing field for self-employed workers.

Understanding SE tax early on is key to avoiding surprises later, and we’ll help you plan for it step by step.

Step 3: Crunch Some Numbers (it's easier than it sounds)

Now that you understand what self-employment tax is, it’s time to estimate how much you might owe.

You can find self-employment tax calculators online, but we’ll walk you through a simple example so you can see how the math works.

Example: Sarah's Side Hustle

Sarah runs a freelance writing business. Here’s how we help her estimate her Self-employment tax:

1. Total income: $25,000
2. Business expenses (like website hosting, software, supplies): $2,000
3. Net income: $25,000 – $2,000 = $23,000 - This is total income less business expenses.
4. Amount Subjected to SE Tax: $23,000 x 92.35% = $21,240.50 - This is 92.35% of net income.  
5. Self-Employment Tax Calculation:  $21,240.50 x 15.3% = $3,249.80

That $3,249.80 is Sarah’s estimated annual SE tax.

In addition, Sarah can claim 50% of the self-employment tax, or $1,624.90, as an income tax deduction.

Sarah also needs to calculate her income tax.

1. Taxable Income: $23,000 (Net Income) - $1,624.90 (SE Tax Deduction) - $15,750 (Single - Standard Deduction) = $5,625.10
2. Income Tax Calculation: $5,625.10 x 10% = $562.51 

Total Taxes = SE Tax + Income Tax = $3,249.80 + $562.51 = $3,812.31

If her total tax liability (including income tax) exceeds $1,000, she must make estimated quarterly payments, which we’ll cover next.

This process gives you a clear snapshot of what to expect—and we’ll help you adjust as your income grows or changes.

What if Sarah Had a Job in Addition to Her Freelance Income?

If Sarah has a full-time job alongside her freelance work, her combined income could push her into a higher tax bracket, and the standard deduction will apply to her total income.

She should update her W-4 with her current employer to ensure her withholding covers her tax liability. If she prefers, Sarah can add extra withholding to her W-4 to cover her freelance income and potentially skip quarterly estimated payments.

👉 Learn more about updating your W-4 and withholding here.

Step 4: Meet the Quarterly Estimated Tax

The IRS generally expects you to make quarterly estimated tax payments if you’ll owe at least $1,000 in taxes for 2025 after subtracting any withholding or refundable credits. Think of it as paying your taxes in smaller chunks throughout the year, so there are no nasty surprises (or penalties) come tax time.

Let’s return to Sarah’s example to see how this works in action.

Sarah’s Estimated Tax: Broken Down Quarterly:

• Annual tax: $3,812.31
• Divided by 4 quarters = $954 per quarter

So Sarah should pay about $954 every quarter to stay current with the IRS.

The IRS provides worksheets in Form 1040-ES to help you fine-tune this number when needed. 

2025 Quarterly Tax Deadlines:

Mark your calendar with these due dates for estimated taxes in 2025:

• April 15
• June 16
• September 15
• January 15 (2026)

Missing a payment or underpaying can result in IRS penalties and interest. But don’t worry—we’ll help you stay on schedule and adjust your payments as needed.

Pro Tip: Use IRS Form 1040-ES

The IRS provides Form 1040-ES, which includes worksheets to help fine-tune your estimated tax amount based on your income and deductions.

We recommend keeping a copy handy.

How to Pay Self-Employed Taxes

So, you’ve done the math. Now it’s time to actually pay those taxes. Luckily, the IRS gives you a few simple ways to handle this—no confusing tax lingo required.

Use the IRS Direct Pay Tool

IRS Direct Pay is the fastest, most straightforward way to pay quarterly estimated taxes. It lets you pay straight from your bank account—no fees, no fancy software required.

• Choose “Estimated Tax” as your reason for payment.
• Select the correct tax year (e.g., 2025).
• Save the confirmation for your records because the IRS loves receipts.

Pay Through EFTPS (Electronic Federal Tax Payment System)

If you’re more of a planner, the EFTPS system might be your new best friend. You can schedule all four quarterly payments at once and forget about it.

• Sign up at eftps.gov.
• Link your bank account and schedule payments ahead of time.
• Receive email confirmations so you always know where things stand.

Bonus: It’s also free to use.

Use Self-Employment Tax Software

Not into logging into IRS portals? Modern tax tools can calculate, schedule, and even automate quarterly tax payments. Set it and forget it? Yes, please.

• Syncs with your income and deductions.
• Reminds you of deadlines.
• Automatically updates if your income changes.

Old-School Option: Pay by Check or Money Order

Still love snail mail? You can mail a check with your 1040-ES payment voucher. Just know it’s slower—and easier to mess up.

• Make checks payable to “United States Treasury.”
• Include your Social Security number, tax year, and “Estimated Tax Payment” on the memo line.
• Mail it to the IRS address listed in the Form 1040-ES instructions.

But seriously, digital technology is faster and safer and gives you immediate proof.

Pro Tips to Stay on Track

Staying organized with your taxes isn’t just about avoiding penalties—it also gives you peace of mind as you grow your business. Here are some simple ways we recommend staying ahead of your self-employment taxes:

1. Set Tax Reminders

Don’t miss a payment—add the quarterly due dates to your digital calendar and set recurring alerts.

We’ve seen it make a huge difference for taxpayers who used to scramble at the last minute.

2. Open a Separate Tax Savings Account

Every time you get paid, transfer a percentage, usually 25% to 30%, into a dedicated tax savings account.

It keeps your tax money separate and safe, so you're never caught off guard.

3. Use Tax Filing Services

Tax filing services can make quarterly payments, tracking write-offs, and estimating taxes a breeze.

And if you'd rather not do it yourself, we’re here to help. e.file-tax.net offers expert-backed services tailored for freelancers, gig workers, and small business owners.

We’ve worked with self-employed individuals who used these tips to stay on top of their tax game. You’ve got this, and we’re here if you need backup.

You've Got This!

Figuring out self-employment taxes might feel overwhelming at first, but it gets easier with every quarter.

Whether freelancing full time, side hustling on weekends, or running your own growing business, you’re already doing the hard part. We’ve helped self-employed filers stay compliant, reduce stress, and save money. And we can help you, too.

Need help filing your return? Let us take care of it for you. Our tax experts are just a click away—and we’re here to ensure nothing falls through the cracks.

👉 Get Help with Your Self-Employment Taxes Now

Let’s make this your smoothest tax season yet.