Managing Personal Finances, Taxes and Savings as a Freelancer

“What are the most common mistakes freelancers make when it comes to managing their finances?

We often see freelancers who are unaware of how being self-employed or doing gig work might impact their personal taxes. When you’re self-employed, you are also responsible for the employer portion of Social Security and Medicare taxes. For 2024, this is 15.3% (12.4% Social Security and 2.9% Medicare). This is different from what people who are W-2 employees would be responsible for. Typically, employees and their employers pay half of Social Security and Medicare taxes. (i.e., you pay 7.65% and your employer pays 7.65%). This can lead to unexpected and unwelcome surprises when filing their tax returns the following year. Making estimated payments or withholding money in a separate account throughout the year, specifically for taxes, can be a huge help.”

Read more from Kate Brownstein in “Managing Personal Finances, Taxes and Savings as a Freelancer” on MoneyGeek.com here.