How do I budget for taxes other than Federal, State, Local? What about Medicare, SS, real estate and others?

I'm trying to sculpt my budget and am totally confused about the tax portion which is the starting point. I kind of understand and can estimate the Fed/State and Local taxes but do I need to pay medicare and SS taxes on freelance work done as well? Am I missing any other taxes? Any good tips on proper estimating? I am a PA resident with 3 kids. My wife and I file together... THANKS for your time! :o)

Public Comments

1. Yes if you are self employed, you are going to have to pay both halves of the social security and medicare taxes. This will be about 12% of your income. You are going to have to make quarterly payments for federal and state taxes so make sure to budget for that. If your wife works, that money will reduce the amount that you have to make in estimated payments probably.
2. Self employment income generally will have additional tax of 15.3% on any profit you make over $400. You are paying two portions of social security and medicare taxes: 1 portion as your own boss and 1 portion as the employee. Each portion is 1.45% medicare tax and 6.2% social security tax (7.65%) You may pay less if you had a large amount of income from this freelance work. (Due to a yearly limitation on how much you can pay into the social security system.) It sounds like you may be in the first few years of doing your freelance work. You may want to consider making estimated payments. This makes the IRS happy in that you are paying them in the same quarter that you are earning the money. This will also reduce some potential fines or penalties. Talk to your tax professional to see if you are required to pay estimated taxes, and what options you have. Shannon Coley - H&R Block - Senior Tax Advisor 5 ** This advice was prepared based on my understanding of the tax law in effect at the time it was written as it applies to the facts you provided. Click on my profile to read more.