Question 1

How is self-employment tax calculated for 1099 income?

Accepted Answer

Self-employment (SE) tax equals 15.3% of 92.35% of your net 1099 earnings — that's 12.4% Social Security (on earnings up to the Social Security wage base, $168,600 for 2024) plus 2.9% Medicare (no cap). You can deduct half of SE tax as an adjustment to income on Form 1040. The calculator shows both the full SE tax and the deductible half.

Question 2

What is the QBI deduction and do I qualify?

Accepted Answer

The Qualified Business Income (QBI) deduction lets eligible self-employed taxpayers deduct up to 20% of qualified business income. For 2024 the income threshold is $191,950 single / $383,900 MFJ. Below those thresholds you can take the full 20% regardless of business type. Above the thresholds, Specified Service Trades or Businesses (SSTBs) phase out. This calculator applies the 20% deduction when your taxable income is below the threshold.

Question 3

How much should I set aside for quarterly estimated taxes?

Accepted Answer

A safe rule is 25-30% of net 1099 income for federal taxes (covering both income tax and SE tax), plus any state tax. The IRS expects quarterly payments on Apr 15, Jun 15, Sep 15 and Jan 15 of the following year. Safe-harbor rules let you avoid penalties by paying 100% of last year's tax (110% if AGI > $150K) or 90% of the current year's tax.

Question 4

Can I deduct business expenses from 1099 income?

Accepted Answer

Yes. As a 1099 contractor, freelancer or sole proprietor you can deduct ordinary and necessary business expenses on Schedule C: home office, mileage, health insurance premiums, retirement contributions (SEP-IRA / Solo 401k), software, equipment, professional fees, marketing, and more. The deduction reduces your net self-employment earnings, which lowers both income tax and SE tax. Enter your expected expenses in the calculator to see the impact.

Question 5

What is the difference between a W-2 and a 1099?

Accepted Answer

A W-2 employee has half of their payroll taxes (FICA) paid by the employer and receives benefits like unemployment insurance. A 1099 independent contractor pays the full 15.3% SE tax themselves, doesn't receive employer benefits, but can deduct business expenses and contribute more aggressively to retirement plans (SEP-IRA / Solo 401k). This calculator is for the 1099 case — the self-employed path.

💼 1099 Income & Expenses

🏦 Retirement & Health (optional)

📈 Your 1099 Tax Breakdown

📅 Quarterly Estimated Payments

📋 Detailed Calculation