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Level 1

New Freelancer with Some Questions - Can Any Experts Help Me Out?

As a freelance copywriter, I'm self employed. I'm really new to all of this, and I don't understand much about taxes. I started up with Quickbooks to keep track of my earnings and help me make quarterly payments. It seems like these quarterly payments are outlandishly high. I need some advice from a freelancer or a freelance expert who might be able to explain the situation to me, because I'm not quite getting it. 


I understand that the estimations are just estimations - but they still seem a bit farfetched.


I understand that I also have to pay what would have been an employer's portion of medicaid and social security taxes, but I'm reading that these can be deducted come income tax time (which yes, I know, is a long way's away, but I like to know what I'm getting myself into). How would I go about deducting that? 

This year's standard deduction for a childless unmarried person like me is about to double, around $12,000. The personal exemption is $4,150. I have a business expense of a work computer totalling about $400. My standard deduction and personal exemption will total $16,150. With that, plus the business expense, I'm looking at $16,550 on a year of $18,000 profit. Not including the deduction of the 7% or so for paying all taxes by myself without an employer sudsidizing them. 

Quickbooks is putting my estimated quarterly taxes at over $800. Is that a realistic number? Does it seem like what I should be paying? If it is and I have no further business expenses throughout the year, what should I expect my refund to look like for 2018's taxes?

I know this is a lot, but I'm really lost. I'm hoping someone who has mastered this will be able to put it to me in terms I understand. 

3 Comments 3
Level 15

New Freelancer with Some Questions - Can Any Experts Help Me Out?

The best advice I can give you is to download the IRS form 1040-ES and instructions - that is the estimated tax worksheet and payment coupons.


Intuit has a whole division dedicated to income taxes on the turbo tax side, tax accountants, enrolled agents, etc


But to think that a different division has them too, is ...well... naive at the best. One division at intuit does not appear to talk to much less use that expertise found in another division. And the proof of that lack of co-ordination is in the software. Relying on that software to do what you should do is backing a dark horse IMO.


Estimated taxes adds up all income - not just the business, compares that against the the expected deductions to get net taxable income. That net amount is subject to estimated quarterly tax payments. I would get the 1040-es and do it manually, and then compare to the intuit software.


As a freelance copywriter you will most likely have home office deductions to net income when you file taxes, see this to make that deductions easier

Level 5

New Freelancer with Some Questions - Can Any Experts Help Me Out?

Greetings Airi.  Rustler gives good avice as sual and yes, $800/qtr sounds way too high if you are making $1500/month (if I read your post correctly).  You are a 1099 contractor and all expenses associated with the job are expensable (paper, pens, phone, internet, software, travel & meal expenses away from home, etc).  You only pay tax on your net income after business expenses not your gross income.  If you make $1500/month before expenses you should owe very little at the end of the year.  If your income is steady every month that makes it easier to figure your tax liability.  If your freelance checks vary from month to month I would wait till later in year to see how much you've made before handing money over to the Feds.  If you overpay it's a free loan to them and you can't get it back till next spring.  Good luck!

Level 7

New Freelancer with Some Questions - Can Any Experts Help Me Out?

Hi @airi - welcome to QB Community! You'll find lots of great resources here for growing your freelance business, not just with accounting but also with things like building your customer base and creating and optimizing invoices to ensure that you get paid on time, every time.


Good for you for taking on estimated quarterly taxes. For a complete list of self-employed expenses and tax deductions, check out this article from our QuickBooks Resource Center.


Let us know how it goes!

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