Estimate your federal and self-employment tax obligations.
Estimated Tax Liability
Net Earnings for SE Tax: —
Self-Employment Tax (15.3%): —
Deductible Portion of SE Tax: —
Adjusted Gross Income (AGI): —
Estimated Federal Income Tax: —
Total Estimated Tax Due:—
Understanding Self-Employed Taxes
As a self-employed individual, you are responsible for paying both income tax and self-employment tax (Social Security and Medicare). Self-employment tax is similar to the Social Security and Medicare taxes withheld from an employee's paycheck, but you pay both the employer and employee portions.
Key Concepts:
Gross Income: This is the total revenue you've earned from your business or freelance work before any expenses.
Business Expenses: These are costs incurred in the ordinary course of your business that can be deducted from your gross income, reducing your taxable income.
Net Earnings from Self-Employment: Calculated as Gross Income minus Business Expenses. This is the base for calculating self-employment tax.
Self-Employment Tax (SE Tax): This tax is calculated on 92.35% of your net earnings from self-employment. The SE tax rate is 15.3% (12.4% for Social Security up to an annual limit, and 2.9% for Medicare with no limit).
Deductible Portion of SE Tax: One-half of your SE tax is deductible as a business expense for income tax purposes. This reduces your Adjusted Gross Income (AGI).
Self-Employed Health Insurance Premiums: Premiums you pay for health insurance for yourself, your spouse, and your dependents can often be deducted as an adjustment to income (reducing your AGI), provided you weren't eligible to participate in an employer-provided health plan.
Deductible Retirement Contributions: Contributions to qualified retirement plans (like a SEP IRA or Solo 401(k)) are deductible and reduce your AGI.
Adjusted Gross Income (AGI): This is your gross income minus certain specific deductions, including the deductible portion of your SE tax, health insurance premiums, and retirement contributions.
Federal Income Tax: This is calculated based on your AGI, considering your tax bracket, filing status, and any other applicable deductions or credits.
Calculation Breakdown:
Calculate Net Earnings for SE Tax: (Gross Income – Business Expenses) * 0.9235
Calculate Self-Employment Tax: Net Earnings for SE Tax * 0.153
Calculate Deductible Portion of SE Tax: Self-Employment Tax / 2
Calculate Adjusted Gross Income (AGI): Gross Income – Business Expenses – Self-Employed Health Insurance Premiums – Deductible Retirement Contributions – Deductible Portion of SE Tax
Calculate Estimated Federal Income Tax: AGI * (Your Federal Income Tax Rate / 100)
Calculate Total Estimated Tax Due: Self-Employment Tax + Estimated Federal Income Tax
Disclaimer: This calculator provides an estimate for informational purposes only. Tax laws are complex and subject to change. Consult with a qualified tax professional for personalized advice regarding your specific financial situation.
function calculateTaxes() {
var grossIncome = parseFloat(document.getElementById("grossIncome").value);
var businessExpenses = parseFloat(document.getElementById("businessExpenses").value);
var healthInsurance = parseFloat(document.getElementById("healthInsurance").value);
var retirementContributions = parseFloat(document.getElementById("retirementContributions").value);
var taxRate = parseFloat(document.getElementById("taxRate").value);
// Input validation
if (isNaN(grossIncome) || grossIncome < 0 ||
isNaN(businessExpenses) || businessExpenses < 0 ||
isNaN(healthInsurance) || healthInsurance < 0 ||
isNaN(retirementContributions) || retirementContributions < 0 ||
isNaN(taxRate) || taxRate 100) {
alert("Please enter valid positive numbers for all fields. Tax rate should be between 0 and 100.");
return;
}
// Ensure expenses do not exceed gross income
if (businessExpenses > grossIncome) {
alert("Business expenses cannot exceed gross income.");
return;
}
// Ensure deductible items do not exceed net earnings where applicable
var netEarningsBeforeSE = grossIncome – businessExpenses;
if (healthInsurance > netEarningsBeforeSE) {
// Health insurance premiums are usually deducted from gross, but we check against net for simplicity of this calculator's flow.
// In reality, the calculation can be more nuanced based on specific IRS rules and limitations.
console.warn("Health insurance premiums are higher than net earnings. Consider consulting a tax professional.");
}
if (retirementContributions > netEarningsBeforeSE) {
// Similar logic for retirement contributions.
console.warn("Retirement contributions are higher than net earnings. Consider consulting a tax professional.");
}
// 1. Calculate Net Earnings for SE Tax
var netForSETax = netEarningsBeforeSE * 0.9235;
document.getElementById("netForSETax").innerText = netForSETax.toFixed(2);
// 2. Calculate Self-Employment Tax
var selfEmploymentTax = netForSETax * 0.153;
document.getElementById("selfEmploymentTax").innerText = selfEmploymentTax.toFixed(2);
// 3. Calculate Deductible Portion of SE Tax
var deductibleSETax = selfEmploymentTax / 2;
document.getElementById("deductibleSETax").innerText = deductibleSETax.toFixed(2);
// 4. Calculate Adjusted Gross Income (AGI)
// Important: Deductions for health insurance and retirement contributions are adjustments to income.
// SE tax deduction is also an adjustment to income.
var agi = grossIncome – businessExpenses – healthInsurance – retirementContributions – deductibleSETax;
// Ensure AGI doesn't go below zero due to large deductions
if (agi < 0) {
agi = 0;
}
document.getElementById("agi").innerText = agi.toFixed(2);
// 5. Calculate Estimated Federal Income Tax
var federalIncomeTax = agi * (taxRate / 100);
document.getElementById("federalIncomeTax").innerText = federalIncomeTax.toFixed(2);
// 6. Calculate Total Estimated Tax Due
var totalTaxDue = selfEmploymentTax + federalIncomeTax;
document.getElementById("totalTaxDue").innerText = totalTaxDue.toFixed(2);
}