Why do 1099 workers owe more than employees expect?

Because no employer withholds for them, and self-employment tax covers both the employer and employee shares of Social Security and Medicare, per IRS guidance — on top of income tax.

Do 1099 workers have to pay taxes during the year?

Often yes. The IRS explains that taxpayers who expect to owe at least $1,000 generally make quarterly estimated tax payments using Form 1040-ES. Check the current IRS rules for your situation.

2026 tax planning guide · By Sultan Mogaji

How much should a 1099 worker set aside for taxes?

Q: How much should a 1099 worker set aside for taxes?

There is no single correct percentage. The amount depends on self-employment tax, federal and state income tax on your total situation, deductions, and any other income or withholding. Commonly cited planning starting points span roughly 20–35% of net self-employment income, but they are estimates to refine — not advice.

There is no single correct percentage — the honest answer is a method, not a number. Your set-aside depends on self-employment tax, federal and state income tax on your whole situation, deductions, and other income. Commonly cited planning starting points span roughly 20–35% of net self-employment income; treat any figure as an estimate to refine with real records, not as advice.

This guide explains the moving parts using current IRS materials so your estimate is built on the right structure. It is general education, not tax advice — the IRS pages linked below and a qualified professional are the authorities for your facts.

The three moving parts

Part	What the IRS materials describe	Why it changes your percentage
Self-employment tax	Covers Social Security and Medicare for the self-employed — both the employer and employee shares.	It applies from low income levels, before income tax.
Income tax	Federal brackets apply to taxable income after deductions; most states add their own.	Your bracket depends on total household income, not just gig income.
Estimated payments	Taxpayers expecting to owe at least $1,000 generally pay quarterly with Form 1040-ES.	Setting aside is half the job; paying on schedule avoids penalties.

Build the estimate from records, not vibes

Start from net self-employment income: gross receipts minus deductible business expenses — which is why mileage and receipt records matter (see the 2026 mileage rate guide).
Apply a planning percentage as a starting point, and label it as an estimate.
Recalculate when income, expenses, filing status, or state change — a fixed percentage set in January is stale by June.
Reconcile against Forms 1099 at year end (see the 1099-NEC threshold guide and the 1099 filing walkthrough).

Common mistakes

Setting aside from gross instead of net (over-reserving), ignoring state tax (under-reserving), skipping quarterly payments while saving diligently, and treating a generic percentage as personalized advice. The percentage is the least important part — the records and the schedule are what keep the estimate honest.

Where Kronos fits

Kronos can label a tax set-aside as a planning estimate, keep the percentage editable, and organize the gig-income, mileage, and receipt records the estimate depends on. It does not file taxes, decide deductibility, or provide tax advice. KronosPay LLC is a financial technology company, not a bank, lender, or tax adviser.

Primary IRS sources

How much should I set aside?

No single correct percentage. Commonly cited planning starting points span roughly 20–35% of net self-employment income — refine with your records and professional advice.

Why do I owe more than employees?

No employer withholds for you, and self-employment tax covers both shares of Social Security and Medicare per IRS guidance.

Do I pay during the year?

Often yes — the IRS describes quarterly estimated payments via Form 1040-ES for those expecting to owe at least $1,000.

Published August 6, 2026. General educational information only; not tax, legal, or financial advice.