Data Source & Methodology
This calculator provides an estimate for the 2024 tax year. All calculations are strictly based on the formulas and data provided by the official IRS guidelines.
Authoritative Data Source:
- Publication: IRS Publication 505, Tax Withholding and Estimated Tax
- Reference: Tax Year 2024 (Revised January 2024)
- Source Link: https://www.irs.gov/publications/p505
Disclaimer: This tool is for estimation purposes only. It does not constitute tax advice. Consult a qualified tax professional for advice specific to your financial situation.
The Formula Explained
The total estimated tax is the sum of your federal income tax and your self-employment tax. This total is then divided by four to determine the quarterly payment.
1. Self-Employment (SE) Tax
SE tax covers Social Security and Medicare. It's calculated on 92.35% of your net income.
$ SE_{\text{Taxable}} = \text{Net Income} \times 0.9235 $
$ SE_{\text{Tax}} = (\min(SE_{\text{Taxable}}, 168600) \times 0.124) + (SE_{\text{Taxable}} \times 0.029) $
- The 12.4% Social Security tax applies only up to the 2024 wage base of $168,600.
- The 2.9% Medicare tax applies to all of your $SE_{\text{Taxable}}$ income.
2. Federal Income Tax
First, we find your taxable income by subtracting deductions.
$ \text{Taxable Income} (TI) = \text{Net Income} - \text{Deductions} $
This $TI$ is then applied to the 2024 progressive tax brackets based on your filing status. For example, the 2024 brackets for a 'Single' filer are:
- 10% on income up to $11,600
- 12% on income over $11,600 (up to $47,150)
- 22% on income over $47,150 (up to $100,525)
- 24% on income over $100,525 (up to $191,950)
- ...and so on up to 37%.
3. Total Quarterly Payment
The final calculation combines both taxes and divides by four.
$ \text{Total Annual Tax} = \text{Income Tax} + SE_{\text{Tax}} $
$ \text{Quarterly Payment} = \text{Total Annual Tax} / 4 $
Glossary of Variables
- Estimated Annual Net Income
- Your total business revenue minus all deductible business expenses (e.g., supplies, software, utilities). This is your profit *before* personal deductions.
- Filing Status
- Your tax filing status as defined by the IRS (Single, Married Filing Jointly, etc.), which determines your tax brackets and standard deduction amount.
- Estimated Deductions
- The amount subtracted from your income to lower your tax bill. This is typically the Standard Deduction for your filing status, or a total of your itemized deductions if they are greater.
- Self-Employment (SE) Tax
- The Social Security and Medicare taxes paid by self-employed individuals, equivalent to what an employer and employee would jointly pay.
- Taxable Income
- Your net income *after* subtracting your personal deductions. This is the amount used to calculate your federal income tax.
How It Works: A Step-by-Step Example
Let's walk through a case for a freelance consultant filing as 'Single'.
- Net Income: $80,000
- Filing Status: Single
- Deductions: $14,600 (2024 Standard Deduction for Single)
-
Calculate Taxable Income:
$ \text{Taxable Income} = \$80,000 - \$14,600 = \$65,400 $ -
Calculate Self-Employment Tax:
$ SE_{\text{Taxable}} = \$80,000 \times 0.9235 = \$73,880 $
$ SE_{\text{Tax}} = (\$73,880 \times 0.124) + (\$73,880 \times 0.029) = \$9,161 + \$2,143 = \mathbf{\$11,304} $ -
Calculate Income Tax (on $65,400):
- 10% on first $11,600 = $1,160
- 12% on next $35,550 (from $11,601 to $47,150) = $4,266
- 22% on remaining $18,250 (from $47,151 to $65,400) = $4,015
- Total Income Tax = $1,160 + $4,266 + $4,015 = \mathbf{\$9,441} $
-
Calculate Total Tax and Quarterly Payment:
$ \text{Total Annual Tax} = \$9,441 \text{ (Income)} + \$11,304 \text{ (SE)} = \mathbf{\$20,745} $
$ \text{Quarterly Payment} = \$20,745 / 4 = \mathbf{\$5,186.25} $
Frequently Asked Questions
Who needs to pay quarterly taxes?
Generally, you must pay estimated quarterly taxes if you are self-employed, a freelancer, or an independent contractor and expect to owe at least $1,000 in tax for the year. This also applies if your income from other sources (like investments or gig work) isn't subject to withholding.
What are the due dates for quarterly taxes?
The tax year is divided into four payment periods. For the 2024 tax year, the due dates are typically:
- Q1 (Jan 1 - Mar 31): April 15, 2024
- Q2 (Apr 1 - May 31): June 17, 2024
- Q3 (June 1 - Aug 31): September 16, 2024
- Q4 (Sep 1 - Dec 31): January 15, 2025
What happens if I miss a payment or underpay?
If you don't pay enough tax throughout the year, either through withholding or estimated tax payments, you may have to pay a penalty for underpayment. The IRS can charge this penalty even if you are due a refund when you file your return. It's best to pay at least 90% of your current year's tax liability or 100% of your previous year's liability to avoid penalties.
Does this calculator include state taxes?
No. This calculator is designed to estimate your *federal* quarterly tax payments to the IRS, which include federal income tax and self-employment tax. It does not account for state or local income taxes, which vary significantly by location. You should check with your state's department of revenue for its own estimated tax requirements.
What's the difference between net income and gross income?
Gross income is your total revenue before any expenses are taken out. Net income (or net earnings from self-employment) is what's left after you subtract all your ordinary and necessary business expenses. You pay self-employment tax and income tax on your net income, not your gross income.
Can I just pay all my taxes at the end of the year?
No. The U.S. tax system is "pay-as-you-go." If you are an employee, this is handled via withholding. If you are self-employed, you are responsible for paying your taxes throughout the year via estimated quarterly payments. Waiting until April 15th to pay the entire year's tax bill will likely result in underpayment penalties.