Question 1

What is self-employment tax and why is it 15.3%?

Accepted Answer

Self-employment tax covers Social Security (12.4%) and Medicare (2.9%), totaling 15.3%. As a W-2 employee, your employer pays half; as a freelancer, you pay both sides. The good news: you can deduct 50% of the SE tax from your taxable income. You pay this on net self-employment income above $400.

Question 2

When are quarterly estimated tax payments due?

Accepted Answer

Quarterly estimated taxes are due four times per year: April 15 (Q1), June 15 (Q2), September 15 (Q3), and January 15 (Q4 of prior year). Missing these deadlines triggers an underpayment penalty. The IRS expects you to pay as you earn, not all at once in April.

Question 3

What business expenses can freelancers deduct?

Accepted Answer

Common deductible expenses include: home office (dedicated space only), equipment and supplies, software subscriptions, professional development and courses, health insurance premiums, retirement contributions (SEP-IRA up to 25% of net, Solo 401k up to $66k), and business portions of phone and internet bills.

Question 4

Should I form an S-Corp to save on taxes?

Accepted Answer

An S-Corp election can save freelancers significant SE tax once income exceeds roughly $80,000. By splitting your income between a reasonable salary and distributions, you only pay SE tax on the salary portion. The administrative costs (payroll, filing, accounting) typically run $1,500–$3,000/year — worth it above $80k net.

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