After Q3 Taxes: Projecting Your Full-Year Tax Bill

The Sept. 15 payment is behind you, or it will be by Tuesday. That leaves one installment in the 2026 cycle, due Friday, Jan. 15, 2027, and about 15 weeks in which anything can still be changed.

This is the moment the arithmetic gets easy. In March you were guessing. Now you have eight months of bank statements and invoices, which is two-thirds of the year settled and recorded. A projection built on that is close enough to act on, and acting on it is the whole point: the January installment can be sized correctly instead of copied from April, and the handful of year-end moves that actually reduce a tax bill all have Dec. 31 deadlines.

Start with profit, and be honest about the eight months

Pull your year-to-date numbers through Aug. 31. You need two figures: everything you collected, and everything you spent running the business. Subtract, and you have net profit. Gross receipts are not the base for anything, and projecting from them is the single most common way people frighten themselves in September.

Take Renata, a freelance UX researcher filing single, with no W-2 job and no state income tax. Through Aug. 31 she collected $71,200 and spent $12,400 on software, contractor help, conference travel and her share of the internet bill. Her year-to-date net profit is $58,800.

Two cautions before that number gets annualized. If your books are behind, catch them up first: a projection built on eight months of income and five months of expenses will overstate the bill badly, and people who have not reconciled since June almost always have more deductions than they think. And if you have a W-2 job alongside the freelance work, the withholding from that job counts as tax already paid, so it belongs in the projection too.

Two ways to annualize, and when each one is wrong

The default method is straight-line: divide profit by the months elapsed, multiply by 12. Renata's $58,800 over eight months annualizes to $88,200. That assumes the last four months look like the first eight.

For steady retainer work, that assumption holds and straight-line is the right method. For everyone else it imports the wrong seasonality without saying so. Renata knows two contracts end in October and she has not replaced them yet, so she projects the remaining four months on their own: about $24,000 of additional profit, not the $29,400 straight-line implies. Her full-year projection is $82,800.

Project Q4 separately whenever you can name a specific reason it will differ: a contract ending, a client on a seasonal budget, a slow December, a big invoice you already know is coming in November. If you cannot name the reason in a sentence, use straight-line and let the January revision correct it.

Renata's projection, line by line

Here is the full calculation on $82,800 of projected 2026 net profit, single filer, taking the standard deduction and a full qualified business income deduction.

Renata paid $3,500 in April, $3,500 in June and $4,300 on Sept. 15, so $11,300 is already in. The January installment is whatever closes the gap.

Now compare that to what the straight-line method would have told her. At $88,200 of projected profit the bill works out to $18,767, so she would have penciled in $7,467 for January. The projection method alone moves the number by $1,474, which is real money to set aside in a quarter when two contracts just ended.

Overshooting is not a catastrophe: an overpayment comes back as a refund when you file in the spring. It does tie up the cash for six months, so in a fourth quarter with two contracts ending, aim the projection at the number you actually expect rather than padding it for comfort.

What the total looks like at other profit levels

Renata's 20.9% is not a universal number, but it is close to typical, and the curve is flatter than most people expect. Self-employment tax runs at a fixed 14.1% of profit (15.3% applied to 92.35%) all the way up to the Social Security wage base, which is $184,500 in 2026. Only the income tax layer moves.

Projected 2026 profit	SE tax	Income tax	Total federal	Effective rate
$40,000	$5,652	$1,775	$7,427	18.6%
$60,000	$8,478	$3,559	$12,037	20.1%
$80,000	$11,304	$5,344	$16,647	20.8%
$100,000	$14,130	$8,235	$22,365	22.4%
$140,000	$19,781	$14,778	$34,559	24.7%

Single filer, standard deduction, full QBI deduction, no state tax. Your own figure will differ, but the shape holds: between roughly $40,000 and $140,000 of profit the total federal rate moves only about six points, because the flat self-employment layer dominates. That is why the common advice to set aside 25% to 30% works across such a wide income range, and why it has a cushion built in for state tax.

If your projection lands well outside this table, the reason is usually a second income source rather than the rates. A spouse's W-2, investment income or a mid-year job change all shift the bracket the freelance profit stacks on top of.

The two levers that still work before Dec. 31

A projection is only useful if something can change because of it. By mid-September, most of the year's tax is already determined. What remains is a retirement contribution and the timing of a few dollars.

Retirement first, because it is the larger lever. A solo 401(k) has to exist by Dec. 31 even though you can fund parts of it later, so this is a September decision, not a December one. The 2026 employee deferral limit is $24,500, with a combined employee and employer cap of $72,000 (IRS Notice 2025-67).

Here is what a contribution is actually worth to Renata, which is less than the bracket table suggests.

That 9.6% is not a rounding artifact. In the 12% bracket with a full QBI deduction, every dollar of deduction saves 12 cents of tax and gives back a fifth of it through the smaller QBI deduction, so the real marginal rate is 12% times 0.8. The number rises with your bracket: in the 22% bracket the same dollar saves 17.6 cents.

So contribute for the retirement, which is the actual reason to do it, and treat the tax saving as a discount rather than a strategy. Anyone who tells you a solo 401(k) will fix a September tax problem is quoting the headline bracket and ignoring both the QBI interaction and the fact that self-employment tax is untouched by any of it.

The second lever is timing, and per dollar it is the stronger of the two. Freelancers are cash-basis taxpayers: income counts when it lands, expenses count when they are paid. If your 2026 projection is higher than you expect 2027 to be, buy the laptop in December rather than January, prepay a software renewal, and do not chase a client for a Dec. 30 payment that could arrive Jan. 5. If 2026 is the lighter year, do the reverse.

Moving $3,000 of legitimate expenses into 2026 saves Renata $692, roughly 23 cents on the dollar. That is more than twice what the same dollar does inside the solo 401(k), for one reason: a business expense reduces net profit, and net profit is what self-employment tax is calculated on. A retirement deferral sits below that line and never reaches it. Expenses you were going to incur anyway are the cheapest deduction available to a freelancer, which is also why inventing ones you were not going to incur is never worth it at 23 cents back on the dollar.

Four ways projections go wrong

Most bad projections fail the same handful of ways, and all four are easy to check before you commit a number to January.

Projecting from deposits

Bank deposits include transfers, refunds, loan proceeds and reimbursements, none of which are income. They also miss cash and platform payouts that were netted against fees. Use your invoices and your Schedule C categories, not the balance in the account.

Forgetting the money already paid

The projection is your total 2026 tax, not your January payment. Subtract the three installments you already sent, plus any W-2 withholding, plus any overpayment you rolled forward from your 2025 return. That last one is the most commonly missed, because it never moved through a bank account.

Assuming safe harbor is still relevant

Paying 100% of your 2025 total tax (110% if your 2025 AGI topped $150,000) protects you from underpayment interest no matter how 2026 turns out, and in a growth year that is genuinely useful. It does not reduce what you owe. If your projection is well above last year, the difference is still due on April 15, 2027, and the safe harbor only decides whether the IRS charges you 7% interest in the meantime.

Treating the projection as final

Redo it in the first week of January, when the year is closed and the number is a fact rather than a forecast. A 20-minute revision then sizes the Jan. 15 installment exactly, and you will have most of the figures your return needs three months early.

What to do this week

Reconcile through Aug. 31 if you have not. Write down year-to-date net profit, the three payments you have made, and your Q4 assumption in one sentence ("two contracts end in October, no replacement booked yet"). Run the projection. If the January number is bigger than what you were planning to send, move the difference into the tax account now, in September, while there is still income arriving to move it from.

Then put the January date on the calendar with the amount next to it. Freelancers who get caught out in April are almost never the ones who ran a projection in September and were wrong by a few hundred dollars. They are the ones who never ran one at all, and found out in the same week the return was due.