Estimated Taxes for Freelancing Dummies

Nobody likes paying taxes, are we right? But, as Benjamin Franklin (supposedly) said, "The only things certain in life are death and taxes." Well, something like that, anyway. And if we want to continue to have an army, roads, schools, libraries, and the like; even freelancers for content farms will have to pay taxes. We're talking freelancers like Courtney Ramirez of LoveToKnow.com, who probably needed more help than she got before writing "Freelance Writers and Estimated Taxes."

Let's get this out of the way up front: not every freelancer needs to pay estimated taxes. If freelancing is a side business that only generates 5 or 10 percent of your income, it's probably not worth the effort because the IRS isn't going to come after you unless your withholding equals less than 90% of your tax liability. Be that as it may, you probably want to find a more... accurate resource than Ramirez (or, for that matter, any of several DotDs who've misinformed about taxes).

That's partially because Ramirez confused estimated taxes and self-employment tax through her entire post. She started with the rather ominous claim that,

"Keeping up to date with the laws regarding freelance writers and estimated taxes will help you keep your freelance writing business legal..."

...which seems rather an overstatement; but perhaps Courtney was thinking of Al Capone's predicament. After that introduction, however, Ramirez started wandering off into cloud-cuckoo land with such advice as,

"You can pay off these taxes in quarterly payments that are made to cover the taxes on the following tax year." – No, Courtney, the quarterly payments are for the current year. "...money earned as a freelancer is taxed twice. Your writing income is taxed as income, but it is also taxed because you are self-employed." – That's a strange way to put it, Courtney. "When you have a job with an employer, your employer takes care of these taxes in the form of the Social Security, FICA and Medicare taxes." – Apparently, Ramirez isn't aware that the employer only pays half of FICA (and that FICA is Social Security and Medicare).

• "Even if you think that your taxes will be less than your refund, you may be required to pay installments because of the nature of your business." – Sorry, Courtney, you don't get a "refund" if you didn't pay any taxes! And as for employed people moonlighting as freelancers? see above...
• "When [estimating] your taxes... the figures won't be exact. They don't take into account the expenses that you pay during the year to be a freelancer, including your Internet connection, educational materials and other business expenses." – If you don't figure your expenses into your quarterly income, you're a friggin' moron, Courtney!

Ramirez conflated estimated taxes (which many people who aren't freelancers pay) with self-employment taxes, misinforms about employer withholding and FICA, and – perhaps worst of all – never mentioned that a portion of self-employment taxes are deducted from gross income before calculating income tax. We figure that's plenty to qualify Courtney as our Dumbass of the Day.

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