How much to save for self-employment taxes?

Save 25-30% of net income. Covers income tax (15-22%) plus self-employment tax (15.3%).

What is self-employment tax?

15.3% covering Social Security (12.4%) and Medicare (2.9%). Paid on 92.35% of net earnings.

Yes if you expect to owe $1,000+ quarterly. Due April 15, June 15, Sep 15, Jan 15.

Home office, internet, software, courses, travel, meals (50%), health insurance. Save receipts.

Estimate annual income × 25-30%, divide by 4. Or use safe harbor: pay 100% of last year's tax ÷ 4.

1099 = self-employed, pay full taxes. W-2 = employer withholds and pays half. 1099 has higher burden.

Yes — 0.5% per month underpayment penalty plus interest. File even if you can't pay.

LLC provides legal protection but not automatic tax savings. Consider S-Corp at $40K+ for tax benefits.

Loading Side Hustle Taxes: The $4,200 Lesson I Learned the Hard Way

I made $28,000 freelancing in 2023 and thought I was crushing it. Then tax season came. Here's the self-employment tax math nobody warned me about.

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