Estimating self employment withholding on top of normal income (2015, calculate, expenses)

[ltkenbo]

So on the side I do some extra freelance type work in addition to my normal career. Obviously, my primary income from my career is already taxed and withheld like normal. So I'm trying to figure out what additional tax payments I need to make on top of this. My self employment income is not very large and it fluctuates. I was looking at the 1040-ES form, but I think this just makes it more complicated since I already have withholding for the rest of my wages. I just started the freelancing business, and so I was planning on making my first estimated tax payment for income I received from it this next month. I was going to calculate it like this:

I know that I'm already in the 15% income bracket, and I won't shoot above that. So

April 2015 payment = (.153 x self employment income) + (.15 x self employment income)

This should be a safe enough way to do it right? Then I would just do this each quarter for the amount I've earned since the last tax payment.

[Electrician4you]

when I was self employed I did 25% rate. Paid quarterly I projected income in advance.

[Hemlock140]

It's hard to "guess" how much you will make without a year or two of track record, but the IRS doesn't penalize you for being way off the first year. I agree with 15% as a good starting point.

[suzy_q2010]

An alternative is to estimate how much you might owe for the entire year, divide that by the number of pay periods in the year for your primary job, and adjust your withholding on that job to deduct an additional amount each pay period.

Your employer can easily do that for you, and it can be adjusted if part way through the year you need to increase or decrease the amount.

See line 6 on the W4:

http://www.irs.gov/pub/irs-pdf/fw4.pdf

Say you estimate your additional tax (income, FICA, and Medicare) will be $2400. You are paid twice a month at your primary job: 24 paychecks.

Divide $2400 by 24 = $100.

Give your employer a new W4 with $100 on line 6. An additional $100 will be deducted from each paycheck.

When you fill out your return, that additional amount will cover what is allocated to the three taxes for your side business.

If you find that you need to change the amount, just do a new W4.

Have you considered incorporation? You may find that helps with tracking expenses related to the side business and maximizes tax benefits for them. It's not really difficult or expensive.