Self-Employed? Here’s How to Take Control of Your Taxes
Being your own boss is great until tax season rolls around and you’re staring at a massive bill, wondering how you got here.
If you’re self-employed, a freelancer, or a 1099 contractor, your taxes don’t work like they did when you had a W-2 job. No one is withholding taxes for you, which means it’s all on you to pay what you owe—on time and in full.
The good news? With the right strategy, you can avoid IRS penalties, lower your tax bill, and keep more of what you earn.
At Insogna CPA, a leading Austin, Texas CPA firm, we help self-employed professionals understand their tax obligations, maximize deductions, and avoid surprises. Let’s break it down.
W-2 vs. 1099 Income: What’s the Difference?
When you were a W-2 employee:
- Your employer withheld income tax, Social Security, and Medicare from every paycheck.
- You got a W-2 at the end of the year and maybe even a refund.
When you’re self-employed (1099 income):
- No taxes are withheld. You have to pay them yourself.
- You owe both income tax and self-employment tax.
- You need to make quarterly estimated tax payments or risk IRS penalties.
Key takeaway: You’re still responsible for paying taxes, but now, it’s up to you to calculate, file, and pay on time.
How Self-Employment Taxes Work (And Why They Feel So High)
As a self-employed professional, you don’t just pay income tax. You also owe self-employment tax, which covers Social Security and Medicare.
Self-employment tax is 15.3% of your net income:
- 4% goes toward Social Security
- 9% goes toward Medicare
Why is it so high? When you had a W-2 job, your employer covered half of these taxes. Now, as your own boss, you’re paying both the employer and employee portions.
Example: If you make $100,000 in profit, your self-employment tax alone is $15,300 before you even pay income tax.
How Insogna CPA Helps:
- We calculate how much you actually owe, so there are no surprises at tax time.
- We structure your income to lower your self-employment tax legally.
You can’t avoid taxes, but you can reduce what you owe.
How to Avoid IRS Penalties: Paying Estimated Taxes
Unlike W-2 employees who have taxes withheld automatically, self-employed professionals must pay taxes quarterly.
IRS Estimated Tax Payment Deadlines:
- April 15 (Q1 Payment)
- June 15 (Q2 Payment)
- September 15 (Q3 Payment)
- January 15 (Q4 Payment)
Miss a payment? You could face penalties and interest even if you pay in full later.
How to Calculate Estimated Taxes:
- A good rule of thumb: Set aside 25-30% of your income for taxes.
- Use IRS Form 1040-ES or work with a CPA in Austin, Texas to calculate how much to pay.
How Insogna CPA Helps:
- We estimate your quarterly taxes based on real numbers, not just guesses.
- We set up an automated tax payment plan, so you never miss a deadline.
Don’t wait until tax season. Plan ahead.
How to Lower Your Tax Bill: Deductible Expenses
The best way to reduce your taxable income and pay less in taxes is by claiming every deduction you’re entitled to.
Common Self-Employment Tax Deductions:
- Home Office Deduction – If you work from home, a portion of your rent, utilities, and internet may be deductible.
- Business Travel & Meals – Flights, hotels, and business-related meals are deductible.
- Marketing & Advertising – Website costs, social media ads, and branding expenses.
- Software & Subscriptions – QuickBooks, Zoom, CRM software, and project management tools.
- Health Insurance Premiums – If you’re self-employed, your health insurance may be deductible.
Pro Tip: Keep detailed records and receipts to back up your deductions. The IRS loves documentation.
How Insogna CPA Helps:
- We ensure you’re claiming every deduction possible.
- We help set up proper expense tracking so nothing slips through the cracks.
Tracking your expenses means paying less in taxes.
Want to Pay Less in Taxes? Here’s What to Do Next.
- Estimate your quarterly taxes – Set aside 25-30% of your income and pay on time.
- Track all your expenses – Use QuickBooks or other accounting software.
- Consider an S-Corp election – If you’re making over $75,000, an S-Corp could cut your self-employment tax.
- Work with a CPA – A tax pro can find deductions you didn’t even know existed.
At Insogna CPA, we specialize in helping self-employed professionals keep more of their money.
Want help getting ahead of your tax obligations? Insogna CPA is here for you. Schedule a consultation today.