Quarterly Estimated Taxes: The January Payment and a Simple Set-Aside Rule

• 1. Know the safe harbor
• 2. Don’t forget self-employment tax
• 3. Set aside a fixed percentage of every payment
• 4. Keep a quarterly log
• Free tools

Freelancers and side hustlers in the US usually have no tax withheld, so the IRS expects estimated payments during the year. The fourth-quarter payment for 2026 income is due January 15, 2027. A set-aside habit turns it into a transfer instead of a scramble.

§1. Know the safe harbor

You generally avoid the underpayment penalty if withholding plus estimated payments cover at least 90% of this year’s tax, or 100% of last year’s tax (110% if prior-year AGI was over $150,000). Last year’s return gives you a known target.

§2. Don’t forget self-employment tax

On top of income tax, net self-employment earnings carry about 15.3% for Social Security and Medicare, calculated on 92.35% of net earnings. It’s the part people most often miss.

§3. Set aside a fixed percentage of every payment

Many freelancers move 25-30% of each client payment to a separate savings account the day it arrives, then adjust once they see real numbers.

§4. Keep a quarterly log

Income received, expenses, amount set aside, amount paid and date. At tax time it answers most of your preparer’s questions.

§Free tools

• Quarterly estimated tax spreadsheet (free CSV for Excel / Google Sheets): https://smartbudgetsheets.surge.sh/templates/quarterly-estimated-tax-spreadsheet/?utm_source=nostr
• Side hustle income tracker (free CSV): https://smartbudgetsheets.surge.sh/templates/side-hustle-income-tracker-spreadsheet/?utm_source=nostr

General information, not tax advice. See IRS Form 1040-ES or a tax professional for your situation.