Self-Employed
Tax Calculator (2022)

Calculate your state, federal and
self employment taxes.

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Your estimated taxes owed

$11,655

Your estimated tax rate

32%

Breakdown

Federal Income Tax
$15.544
State Income Tax
$1.519
Self-Employment Tax
$11.304

Ruby Money was built to help Soloprenuers stay on top of taxes.
Our members save an average of $6,500 on their taxes.

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Running your own business can be incredibly rewarding, but there can be a lot to learn;  especially when it comes to taxes. If you are afraid to make a costly tax mistake, or simply wish you knew more about how the system works, you are not alone.

We’re here to help. We’ve answered the most common questions we hear about paying taxes as a solopreneur.

What taxes will I pay as a solopreneur?

As a self employed worker you will pay Federal, State income tax along with Self-employment tax. 

Federal & State income tax will vary by where you live,  your total income and how many deductions & credits you have.

Self-employment tax rate is a flat 15.3% on all your business net income. This includes 12.4% for Social Security tax and 2.9% for Medicare tax. This percentage might seem higher than you remember it being as a W-2 employee. That’s because as a self-employed person, you are responsible for the tax obligations of both employer and employee. Lucky you!

While what you actually owe can vary a lot from person to person, the best practice is to save about 30% of your self-employed income to pay for taxes. (If you’re looking to automate this, check out Ruby Money).

When do I have to pay taxes?

If you are self-employed the IRS expects you to pay estimated taxes each quarter. Estimated payments are based on what you anticipate owing for the year. If you anticipate owing at least $1,000 in taxes over the course of the year, you should be making quarterly estimated payments to avoid a penalty at the end of the year. 

Your quarterly tax payments will include both self-employment tax and income tax.

If you don’t pay quarterly taxes, you may incur penalties from the IRS. While the penalties aren’t large, they can add up especially as your earnings rise. The IRS will back-calculate how much they think you should have paid every quarter and charge you monthly interest on top of the difference between what they thought you should pay and what you actually paid.

For 2022, the dates for paying estimated taxes through the end of the year are September 15 for third-quarter and January 17, 2023 for fourth-quarter payments. In 2023 and beyond, you can expect the due dates on a federal level to be around April 15, June 15, September  15, and January 15 of the following year. 

When you’re just starting out, estimating what you will owe for the year can be tricky. Even after you’re established, your income can fluctuate significantly from year to year. Here are 3 ways you can give yourself a good estimate:

  1. Pay 25% of your tax bill last year.  (This works best if you expect to earn about the same amount this year.)
  2. Use the IRS Form 1040 ES estimated tax worksheet
  3. Give Ruby Money a try. Our app keeps track of your income and calculates your estimated payments each quarter.

How can I lower my taxes?

Paying 30-50% of your hard won profits can be frustrating. But the good news is there are a number of strategies you can engage to lower your taxes and increase take-home profit.

Many of the expenses you incur to run your business are likely to be deemed deductible, as long as they are “ordinary and necessary.” This means things that would be seen as normal in your line of work to spend money on. 

The more you are able to track expenses, the easier they will be to document and deduct. We recommend keeping a spreadsheet, a book keeping tool or using a tax app like Ruby Money to keep track of your deductions.

In addition, putting money in a qualified retirement account such as a SEP-IRA can also lower your taxes. You can contribute up to 20% of your net income (up to $61,000 in 2022) up until tax deadline the following year. SEP-IRA’s are a powerful tool as they both help you save for the future while lowering tax deductions.

What’s the best way to stay on top of taxes?

Whether you work with an accountant or DIY your annual tax filing, having a system for setting aside what you owe in taxes, tracking expenses and making sure you make quarterly estimated payments can help you avoid costly tax mistakes. Key takeaways are: 

Tax withholding, retirement savings and profit tracking all in one app. We handle the math (and the IRS) so you can focus on what you love. 

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