How I handle taxes as a freelancer (who also has a W-2 job)

I’m not an accountant, and this is not professional tax advice. This is for entertainment and educational purposes only, based on my past experiences as a freelancer and business owner.

My 2025 taxes are going to be interesting…to say the least 😅. Like many other freelancers, I also have some W-2 income and other income streams that I’ll need to file my taxes for before the dreaded April 15th deadline (and March 16th for my S-corp taxes, which I’ve thankfully already knocked out).

This isn’t my first year filing taxes for multiple types of income, and it won’t be my last. Yay for creating a flexible working life like this 🙌 , but also, nay for the tax complexity that sometimes comes with it.

I used to be really bad at handling it all without stressing TF out. Like this bad:

But I’ve gotten better at it over the years.

These are the main income types I’ll be filing 2025 taxes for:

Side note: After selling the website and closing Iliketodabble LLC, my freelance income for 2026 will be under a new business name. I’m also debating creating a separate business for my other sites that’ve just started generating income (although very small amounts for now).

I could end this post right here with these 3 words: “Hire an accountant,” but not everyone can pay for an accountant. Plus, you should know how your unique tax situation works and how to track taxes throughout the year so you aren’t SOL come tax season.

As freelancers, we’re required to pay self-employment taxes AND income tax on our earnings, which we have to pay manually. This makes our tax situation a little different from W-2 employees, who work for a company that withholds taxes for them based on what they opted for on their W-4. But what if you’re also a W-2 employee and freelance for a side hustle?

We’ll dig into that a bit more in the sections below. But first, let’s clarify what your self-employment and income taxes look like as a freelancer, then we’ll add in the W-2 piece.

A simple breakdown of your freelance taxes:

But the IRS states, “When figuring your adjusted gross income on Form 1040, Form 1040-SR, or Form 1040-NR, you can deduct one-half of the self-employment tax.”

Interestingly enough, W-2 employees technically pay self-employment tax too, but only half of it (which is what you see on pay stubs under Social Security and Medicare). Their employers cover the other half. We, self-employed folks, cover both. 🫠

The IRS requires freelancers and anyone expecting to owe $1,000 or more for the year to pay quarterly estimated taxes. If you also live in a state with state income tax, you may also need to make estimated tax payments to your state’s department of revenue.

These are the 4 quarterly deadlines for making federal estimated tax payments (add these to your calendar!):

If you haven’t already, create an account with the IRS to make payments and track your historical tax payment data. This is the portal link where you’ll do that.

When deciding how much to pay each quarter, look at your profit for the quarter (not your income) and do the percentage calculation on it from there. Since income can be pretty unexpected for freelancers, it’s hard to calculate what that percentage would be for BOTH self-employment and income taxes for the quarter. I’ve gone with an estimate of 25%-30% in the past, which seemed to suffice.

You could also look at your freelance income from the past year or 2 (if you’ve been freelancing that long) to see the income trend and calculate from there. ADP has a great free tax calculator for this.

If you’re like me and have a W-2 job, you pay income taxes on those earnings too, which can make your estimated tax payments hard to project. I’ve opted to have extra taxes withheld from my paychecks in the past when I worked at Mastercard (before I quit to run my blog full-time in 2022), and that helped cover the additional estimated taxes from my freelance income. (I show how to do this on your W-4 in the section below this.)

If you don’t know how to calculate your withholdings, use the Tax Withholding Estimator from the IRS.

When I quit my job at Mastercard and started classifying my company as an S-corp, the way I kept track and paid my taxes changed. I was able to run payroll and pay myself as a W-2 employee with a salary, so all taxes were withheld from those paychecks, and the monthly salary payments were recorded as expenses. This helps lower my business taxes while paying only my income taxes through my paycheck.

However, as I mentioned earlier in this post, since the employer usually covers self-employment taxes for their W-2 employees, I am both the employee and the employer in this scenario. I still end up paying both, but it still saves me money because of my S-corp classification.

Now that I’ll be going forward into 2026 without Iliketodabble LLC, this will be different for me again because I won’t have an S-corp anymore. At least not yet. I had an S-corp with ILTD because my business reached a more than $60,000 in net income each year, which is why it was suggested to me back when I was with Collective for my business accounting.

I won’t start my new business out as an S-corp until I have a good measurement of what this year’s income will be. So, I’ll have to either withhold more from my paycheck at Xome or make sure I pay estimated taxes on my freelance income.

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The easiest way to update your tax withholdings on any of your W-2s is to go through the portal your employer has supplied you to go into and make those changes. Unfortunately, if your employer doesn’t have these electronically accessible, reach out to the HR department to see how you can update yours.

For example, if they exist in ADP, you’ll find the Tax Withholdings area of the portal where you can make these changes. Enter your extra income or withholding amount in the respective fields below:

Side note for those of you with multiple W-2s: Since each W-2 shows only a fraction of your income for the year, your withholdings aren’t accurately calculated from your full W-2 income (because one W-2 doesn’t know about your other W-2), you might not be withholding enough on each of those W-4s.

If you’ve ever gotten more than one type of 1099 in the mail from a client, you’re probably confused about why. There are actually several types of 1099s.

Here’s a brief breakdown of those:

Income, expenses, and taxes, oh my. All freelancers and business owners should be tracking these 3 numbers. If you sell digital or physical products, you’ll also need to track those to pay any sales tax owed to your state, depending on your state’s requirements.

I currently use Xero with my accountant for bookkeeping throughout the year, which is set up to pull transactions automatically from my business bank account and business credit card. I use the business accounting services with H&R Block because that happened to be where the accountant I like works, and it makes filing taxes much easier since they already have all of my data in my account.😊

Previously, I’ve used several other tools to do this when I tried to DIY my taxes without an accountant. A few of those included QuickBooks and Lunafi (not sure if this app is supported anymore, but it had one of the easiest interfaces I’d used).

If you just want a simple tool to start out with, I made a super basic spreadsheet about 7 years ago to help myself track everything manually before I had more transactions and needed more functionality from an accounting app. You’re welcome to use it for free!

This stuff used to scare the shite out of me. Manually keeping track of it at first felt like I was facing it head-on and helped me understand the basics of it much better.

If you’re thinking, “Why don’t you just use AI for taxes and tracking income?” — Well, I do. Xero uses AI in its tools. H&R Block does too. If you’ve used any sort of accounting and tax software like those, you’re probably utilizing AI.

This is nothing new in the financial industry, and if you want to use AI to help you with something like this that needs your sensitive personal financial data, keep your usage within the bounds of the financial providers you already use, like your bank, credit union, tax servicer, accounting software, bookkeeping software, etc. But I beg of you, DO NOT feed your personal financial information, bank statements, and tax forms into generative AI chatbots like ChatGPT and Claude. That’s begging for a data leak.

Anyway, I hope this guide is useful! Drop a comment below if it ended up helping you in any way 👇

Until next time,

💜 Daniella