Freelance IT Taxes Guide
IT freelance taxes guide: self-employment tax, quarterly estimated payments, deductible expenses, retirement accounts, S-Corp structure, and whether to use...
The exact change
For an IT freelancer earning $150,000 in net business income: - Self-employment tax: $150,000 x 15.3% = $22,950 - Deduction for half of SE tax: $11,475 - Net SE tax burden: $22,950
For an IT freelancer earning $150,000 in net business income: - SE tax base (92.35% of net earnings, per IRS rules): $150,000 x 92.35% = $138,525 - Self-employment tax: $138,525 x 15.3% = $21,195 - Deduction for half of SE tax: $10,598 - Net SE tax burden: $21,195
Suggested change
Corrected the self-employment tax calculation to apply the IRS-mandated 92.35% net-earnings adjustment before the 15.3% rate, changing the result from $22,950 to approximately $21,195.
Why this is better
Corrected a genuine calculation error: the article computed self-employment tax as $150,000 x 15.3% = $22,950, but the IRS SE tax base is 92.35% of net earnings, not the full amount. Applied the IRS-mandated adjustment, changing the result to approximately $21,195, and updated the dependent half-SE-tax deduction figure to match.
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