quarterly-tax-ranger

Use when you owe quarterly estimated taxes (freelance, 1099, gig, small business) — computes safe-harbor payments across the four IRS due dates (Apr 15 / Jun 16 / Sep 15 / Jan 15), warns on underpayment penalties, handles uneven income with the annualized-income method (Form 2210 Schedule AI), and builds a self-employment tax + QBI + deduction ledger so April 15 is bookkeeping, not archaeology.

Overview

Freelancers and side-hustlers get destroyed twice: once by the April bill they didn't save for, and again by the underpayment penalty on top. The math that prevents both is simple but never done: set aside the right fraction of every payment, and send four correct estimates on time — adjusted for the fact that Q2 income isn't Q1 income. scripts/quarterly_tax.py computes safe-harbor quarterly payments (100%/110% of last year's tax), the annualized-income method for lumpy earners, SE tax with the Social Security wage-base interaction, QBI deduction pass-through, and prints a per-payment "as you earn" set-aside ledger.

When to Use

• First year freelancing / first 1099 / first profitable side business.
• Income is uneven (big Q4 contract, seasonal gig) — safe harbor overpays.
• Deciding how much of each client payment to move to a tax sub-account.
• Catching up after missed quarterlies without panicking.

Don't use for: corporate/LLC payroll tax (different regime), non-US self-employment (rates differ; safe-harbor dates are IRS), or state estimates in every state — federal math with a state add-on line.

How It Works

1. The three safe harbors: owe < $1,000 at filing, OR pay 90% of current year tax, OR pay 100% of last year's tax (110% if last-year AGI > $150k). Any one avoids the underpayment penalty — the script picks the cheapest certain one.
2. Quarterly split: default 25/25/25/25 of the safe-harbor target; due dates Apr 15 / Jun 16 (Jun 15 on weekends) / Sep 15 / Jan 15 next year.
3. Annualized income (Form 2210 Schedule AI): for lumpy income, compute tax on cumulative YTD annualized income each period and pay only what that period actually earned — Q1-heavy vs Q4-heavy incomes get very different correct payments.
4. SE tax: 92.35% × 15.3% up to the SS wage base, 2.9% (plus 0.9% Additional Medicare over $200k) above; half of SE tax deducts from income.
5. QBI: 20% of qualified business income (pre-199A phaseouts) reduces taxable income before the marginal-rate estimate.
6. Ledger: per $1,000 of gross, the set-aside split (federal income + SE + state) and the running balance vs the next due date.

Using the Script

bash

# Demo: three realistic freelancer profiles
python3 scripts/quarterly_tax.py --demo

# You: last year's total tax, this year's expected net profit
python3 scripts/quarterly_tax.py --prior-tax 8200 --profit 65000 \
    --filing single --state-rate 5.0

# Lumpy income: quarterly net profits (Q1..Q4)
python3 scripts/quarterly_tax.py --prior-tax 8200 --filing single \
    --q 9000 0 0 22000 --annualized --state-rate 5.0

Worked Example

Single freelancer, $65k expected net, $8,200 last-year tax, 5% state: safe-harbor target = $8,200 (100% rule, under $150k AGI) → $2,050 per quarter; the "as-earned" 90% estimate for THIS year (SE tax + income after QBI + half-SE deduction) ≈ $14.5k federal → the ledger says set aside 24.9¢ per $1 gross (incl. state) and the two numbers are compared so you can pick safe-harbor certainty vs. paying-as-earned. With --annualized and --q 9000 0 0 22000, Q1's payment drops to the tax on annualized Q1 income only (~$2.4k) instead of a flat quarter of an estimate that assumed February-level income all year.

Common Pitfalls

1. Forgetting SE tax entirely. Income tax withholding habits (22% bracket) meet 15.3% SE tax on top — first-year freelancers under-save by a third.
2. Treating the four dates as even quarters. Q2 is 2 months (Apr–May), Q3 and Q4 are 3. The DATES are fixed; income usually isn't.
3. Missing the 110% cliff. Last-year AGI over $150k means 100% safe harbor is NOT available — 110% is. The script checks this.
4. Safe harbor on a falling-income year. Paying 100% of a big last-year bill protects you but loans the IRS money interest-free; annualized method pays the true amount — if income is collapsing, that's the move.
5. QBI amnesia. Forgetting the 20% pass-through deduction overwithholds; it's why "30% for taxes" folklore overshoots for many sole proprietors.
6. State quarterlies. Most states mirror the federal dates but have their own thresholds; the --state-rate line is an estimate, not a filing.

Verification Checklist

• Safe-harbor selection states WHICH harbor and why (100/110/90%).
• Quarterly due dates printed with each payment (no weekends assumed blindly).
• SE tax shows the wage-base split when profit crosses it.
• QBI and half-SE deduction applied in the 90%-estimate path.
• Annualized mode labels itself "Schedule AI method" and shows the per-period cumulative income.
• Output ends with the "estimates, not tax advice" boundary line.