| Scenario | 1099 income | Expenses | Savings | Payments | Notes |
|---|---|---|---|---|---|
| Starter | $40,000 | $6,000 | $4,000 | $2,000 | Low state rate, effective federal rate ~14%. |
| Steady | $85,000 | $12,000 | $10,000 | $8,000 | SE tax enabled; credits and QBI as applicable. |
| High earn | $160,000 | $25,000 | $25,000 | $20,000 | Consider itemized deduction and bigger buffer. |
Coverage score meaning
The calculator reports coverage as covered funds divided by estimated liability. Covered funds include savings, paid estimates, and extra withholding. A 100% score means your current plan matches the estimate. Scores under 90% often signal cash‑flow risk near filing time. Scores above 110% indicate a buffer for rate or income changes. Track coverage after major invoices to avoid drift.
Profit drivers and deduction impact
Net profit is 1099 income minus business expenses, and it drives most outputs. Every $1,000 expense reduction in profit can lower tax exposure materially. Switching between standard and itemized deductions changes taxable income directly. The QBI option applies a simplified percent of profit, capped to taxable income. Use the scenario table to test realistic expense and deduction ranges.
Federal methods and sensitivity
Effective rate mode is fastest when you already know a blended rate. Progressive mode approximates bracket behavior for directional planning. If taxable income rises, marginal rates can increase faster than averages. Sensitivity testing helps: try rates at 12%, 18%, and 24% and compare. Run three rate cases and keep the median as your monthly budgeting baseline. Save the CSV snapshots to track changes as income estimates evolve.
Credits, payments, and withholding strategy
Credits reduce income tax in this estimate, then SE tax is added separately. Payments already made plus extra withholding reduce remaining liability. If you are short today, monthly planning can smooth the catch‑up amount. Increasing withholding can be simpler than separate estimated payments. Always confirm how credits apply for your personal filing situation.
Planning cadence for stable cash flow
The quarterly suggestion spreads remaining liability across four payments and adds your selected buffer for safer execution. The monthly suggestion uses months remaining and can reduce surprises. Use the trajectory chart to see cumulative progress toward 100% coverage. A consistent monthly reserve improves predictability for irregular income. Recalculate after major invoices, expense shifts, or retirement changes. Seasonal income may need a higher buffer in peak months. Keep tax reserves in a separate account.
FAQs
1) What does “coverage” measure?
It compares your saved and paid amounts to the estimated total liability. It is a planning ratio, not a compliance metric, and it changes whenever inputs, rates, or deductions change.
2) Should I use effective rate or progressive mode?
Use effective rate when you have a reliable blended percentage. Use progressive mode for a directional bracket‑style estimate. For accuracy, match your real tax year tables outside this tool.
3) Why does self-employment tax matter?
Most net 1099 earnings are subject to SE tax, which can be significant. This estimate applies a multiplier and rate, then deducts half of SE tax in the AGI calculation.
4) How is QBI handled here?
QBI is simplified as a percent of net profit and capped to taxable income. Real QBI rules include limits and definitions. Use this as a rough sensitivity lever, not a final number.
5) How do credits affect the result?
Credits reduce the combined income tax portion in this model, then SE tax is added. If your credits are restricted or refundable, the real effect may differ from this simplified approach.
6) How often should I update the calculator?
Update monthly or after meaningful changes: new contracts, major expenses, retirement contributions, or withholding adjustments. Frequent refreshes improve planning accuracy and reduce year‑end surprises.
- Net profit = 1099 gross income − deductible business expenses.
- SE tax ≈ net profit × (SE multiplier) × (SE tax rate). A half deduction is applied to AGI.
- AGI estimate = net profit + other income − deductions − (SE tax ÷ 2).
- Taxable before QBI = max(0, AGI − deduction used).
- QBI deduction ≈ min(taxable before QBI, net profit × QBI%).
- Taxable income = max(0, taxable before QBI − QBI deduction).
- Federal tax = taxable income × effective rate (or sample progressive brackets).
- State tax = taxable income × state rate.
- Income taxes after credits = max(0, federal + state − credits).
- Total liability = income taxes after credits + SE tax.
- Coverage % = (savings + payments + extra withholding) ÷ total liability × 100.
- Suggested quarterly = (max(0, total liability − payments − extra withholding) ÷ 4) × (1 + buffer).
- Suggested monthly = (max(0, total liability − covered amount) ÷ months remaining) × (1 + buffer).
- Enter your expected 1099 income and deductible expenses.
- Add other income and above-the-line deductions you anticipate.
- Select standard or itemized deductions, then enable QBI if relevant.
- Choose a federal method: effective rate for speed or sample brackets.
- Enter credits, state rate, and decide whether to include SE tax.
- Add payments, extra withholding, and savings you’ve set aside.
- Set months remaining and buffer to shape your plan cadence.
- Click Calculate Coverage for charts and recommendations.
- Download CSV/PDF to keep planning notes organized.