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Calculate your self-employment taxes, QBI deduction, federal/state income tax, and net take-home income
Net Business Take-Home
Effective Tax Rate: 24.1%
Revenue Allocation Breakdown
Self-employed individuals pay both employee and employer shares of Social Security and Medicare taxes (15.3% total), but get a 50% deduction of this tax. W-2 employees pay only 7.65% (their employer pays the other 7.65%).
Self-Employment Tax (1099 FICA)
Federal Income Tax & Deductions
Summary Results
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Succeeding as a freelancer or sole proprietor requires managing your own withholding. Since taxes aren't automatically deducted from your business checks, understanding tax write-offs, standard deductions, and the 20% QBI deduction is crucial to maximize your take-home pay.
Ordinary and necessary business expenses reduce your net profit, directly lowering both your self-employment and income tax burdens. Read about deductible business expenses on the IRS Schedule C instructions.
The IRS requires quarterly estimated tax payments if you expect to owe $1,000 or more. Avoid underpayment penalties by reviewing IRS Form 1040-ES.
Using a Solo 401(k) or SEP-IRA allows you to deduct significant pre-tax retirement contributions, reducing your overall federal income tax rate.
Smart tax planning is the key to business profitability. Keep clean records of all expenses and consult a CPA to optimize your tax return.
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