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I have a lot of questions about this but I'm only going to dive into these two for now:

What tool can I use to calculate my taxes?

As a freelancer, are there other options besides filing as self-employed, and what are they?

The situation: I'm a U.S. citizen working in U.S. This year, I started working as a freelance web developer, and I want to know how much taxes I'll have to pay. This would be helpful in bidding projects, because I would be able to just add taxes on to the price I charge. I'm guessing it has to do with how much I make, but does anyone know the specific breakdown?

Background Info

Last year, I worked in construction for a home owner. Because he hired me as a contracted laborer, he didn't give me a W2 or a 1099, and I had to file my taxes as self employed. I ended up owing a lot of money I hadn't planned on even though I had saved some money each paycheck for taxes. This sucked a lot, and I want to avoid that. Am I going to file them the same this year? (Nothing else tax-related has changed but my job)

I don't even know where to start looking for answers. Any suggestions for where to go for professional advice?

I found a similar question here.

Similarities: I'm a student full time.

Differences:

  • I'm not Canadian
  • I don't expect to make a lot of money at this

Other tax related stuff: I'm not married, I don't own a business, I don't even have a business license, I haven't asked for 1099s from my clients.

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    Try an accountant! – user9822 Mar 11 '15 at 20:37
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    If you are a contractor you should get a 1099 instead of a W2 – JohnFx Mar 11 '15 at 21:38
  • @JohnFx not for small amounts... – littleadv Mar 11 '15 at 22:12
  • @MarkDoony students usually are not rich enough to afford accountants and the situation most definitely doesn't warrant it. – littleadv Mar 11 '15 at 22:13
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    @ColeTrumbo 1099 (tax reporting form) is only required for annual payments of $600 or more. – littleadv Mar 12 '15 at 5:26
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Whether you're self-employed or not, knowing exactly how much tax you will pay is not always an easy task. Various actions you can take (e.g., charitable donations, IRA contributions, selling stocks) may increase or reduce your tax liability.

One tool I've found useful for estimating federal taxes is the Excel 1040 spreadsheet. This is a spreadsheet version of the income tax return form. It is not official and is not created by the IRS, but is maintained as a labor of love by a private individual. In practice, however, it is pretty much an accurate implementation of the tax calculation algorithms encoded in the tax forms and instructions.

The nice thing about it is that it's a spreadsheet. You can plug numbers into various slots in the spreadsheet and see how they affect your federal tax liability. (You may also owe state taxes depending on what state you live in.) Of course, the estimates you get by doing this are only (at most) as accurate as your estimates of the various numbers you plug in. Still, I think it's a free and useful way to get a ballpark estimate of your tax liability based on numbers that you can more easily estimate (e.g., how much money you expect to earn).

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The amount of the income taxes you will owe depends upon how much income you have, after valid business expenses, also it will depend upon your filing status as well as the ownership form of your business and what state you live in. That said, you will need to be sure to make the Federal 1040ES quarterly prepayments of your tax on time or there will be penalties.

You also must remember that you will be needing to file a schedule SE with your 1040. That is for the social security taxes you owe, which is in addition to your income taxes. With an employer/employee situation, the FICA withhoding you have seen on your paycheck are matched by the same payment by your employer. Now that you are self-employed you are responcible for your share and the employer share as well; in this situation it is known as self-employment tax. the amount of it will be the same as your share of FICA and half of the employer's share of FICA taxes. If you are married and your wife also is working self-employed, then she will have to files herown schedule SE along with yours. meaning that you will pay based on your business income and she will pay baed on hers.

your 1040Es quarterly prepayment must cover your income tax and your combined (yours and hers) Self Employment taxes. Many people will debate on the final results of the results of schedule SE vrs an employee's and an employer's payments combined. If one were to provides a ball park percentage that would likely apply to you final total addition to your tax libility as a result of needing schedule SE would tend to fluctuate depending upon your total tax situation; many would debate it. It has been this way since, I first studied and use this schedule decades ago. For this reason it is best for you to review these PDF documents, Form 1040 Schedule SE Instructions and Form 1040 Schedule SE.

As for your state income taxes, it will depend on the laws of the state you are based in.

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    " the amount of it will be the same as your share of FICA and half of the employer's share of FICA taxes" You mean your share + the employer's share – user102008 Mar 12 '15 at 0:52
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    No, that's incorrect. You would pay $200 in self-employment tax. – user102008 Mar 12 '15 at 18:28
  • Note that as long as your estimated tax payments are equal to your previous year's tax, you don't incur penalties. Which makes things a lot easier when your self-employment income is erratic and unpredictable, as mine is. – jamesqf Mar 12 '15 at 18:34
  • @MichaelCresta: Yes, and tax deduction on the income is very different from reduction of your tax directly. You should correct your answer. Also, note that it is exactly the same as when you work for someone else -- the employer's share of FICA is a deduction to the employer's business income. – user102008 Mar 13 '15 at 4:35

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