Quarterly Tax Worked Example

Step-by-step calculation example for a self-employed freelancer. Follow along with real numbers to understand how quarterly taxes are calculated.

Client Profile

Filing Status

Single

State

California

Prior Year Tax Liability

$12,000

Prior Year AGI

$65,000 (below $150k threshold)

Expected 2025 Income

$80,000 (self-employment net profit)

Business Expenses

$0 (included in net profit)

Withholding

$0 (no W-2 income)

Tax Credits

$0

Step 1: Calculate Self-Employment Tax

Formula (Schedule SE):

SE Net = Net Profit × 0.9235

SE Tax = (min(SE Net, $168,600) × 0.124) + (SE Net × 0.029)

Net Profit$80,000
SE Net (92.35% factor)$80,000 × 0.9235 = $73,880
Social Security Tax (12.4% on $73,880)$73,880 × 0.124 = $9,161.12
Medicare Tax (2.9% on $73,880)$73,880 × 0.029 = $2,142.52
Total Self-Employment Tax$11,303.64

Step 2: Calculate Income Tax

Formula:

Taxable Income = Net Profit - (SE Tax ÷ 2) - Standard Deduction

Income Tax = Apply tax brackets to taxable income

Net Profit$80,000
SE Tax Deduction (50% of SE tax)$11,303.64 ÷ 2 = $5,651.82
Standard Deduction (2025, Single)$15,000
Taxable Income$80,000 - $5,651.82 - $14,600 = $59,748.18

Federal Tax Calculation (2025 brackets, Single):

  • • $0 - $11,600: $11,600 × 10% = $1,160
  • • $11,600 - $47,150: ($47,150 - $11,600) × 12% = $4,266
  • • $47,150 - $59,748: ($59,748 - $47,150) × 22% = $2,771.56
Total Federal Income Tax$8,197.56
State Tax (CA, ~9.3% on $59,748)≈ $5,556.56
Total Income Tax$13,754.12

Step 3: Calculate Annual Tax Due

Annual Tax Due = Income Tax + SE Tax - Credits - Withholding

Income Tax$13,754.12
Self-Employment Tax$11,303.64
Tax Credits$0
Withholding$0
Annual Tax Due$25,057.76

Step 4: Calculate Quarterly Payment

Annual Tax Due$25,057.76
Quarterly Payment (÷ 4)$6,264.44 per quarter

Step 5: Check Safe Harbor Rules

Safe Harbor Options:

  • • 90% of current year: $25,057.76 × 0.90 = $22,551.98
  • • 100% of prior year: $12,000 (AGI < $150k)
  • • 110% of prior year: N/A (AGI < $150k)
90% of Current Year$22,551.98
100% of Prior Year$12,000

Note: While paying $12,000 (prior year safe harbor) would avoid penalties, it would leave a balance of $13,057.76 owed at tax time. Better to pay closer to the actual tax due ($25,057.76 ÷ 4 = $6,264.44 per quarter).

Recommended Quarterly Payment$6,264.44

Quarterly Payment Schedule

Q1 (Jan-Mar)

Due: April 15, 2025

$6,264.44

Q2 (Apr-May)

Due: June 16, 2025

$6,264.44

Q3 (Jun-Aug)

Due: September 15, 2025

$6,264.44

Q4 (Sep-Dec)

Due: January 15, 2026

$6,264.44
Total Annual Payment$25,057.76

Key Takeaways

  • Self-Employment Tax: Uses 92.35% factor (Schedule SE) before applying 15.3% rate
  • Safe Harbor: Can pay 100% of prior year to avoid penalties, but may leave balance due
  • Quarterly Payments: Divide annual tax by 4 for even income, or use annualized method for uneven income
  • State Taxes: Don't forget state quarterly requirements (varies by state)

Try It Yourself

Use our free quarterly tax calculator with your own numbers to see the calculations in action.

Important Notes

  • • This example uses simplified calculations. Actual tax brackets and deductions may vary.
  • • State tax rates are approximate. Use your state's actual rates for precise calculations.
  • • For uneven income, use the annualized income installment method (Form 2210).
  • • Always consult with a tax professional for complex situations or to verify calculations.