Estimated taxes when you drive for yourself
An employee has tax taken out of every settlement by someone else. A driver in business for themselves does not, so the law expects the tax to be paid during the year rather than all at once at the end of it.
Nothing here works out an amount for one person. It explains which rules apply so a driver knows what they are looking at, and what to bring to whoever prepares the return.
What the rules say
Withholding and estimated payments do the same job
Both are ways of paying tax as income is earned. One is done for you out of wages; the other you send in yourself. Someone with both kinds of income in a year can end up using both.
What the rule actually requires
26 U.S.C. § 6654(a) adds an amount to the tax in the case of an underpayment of estimated tax by an individual, determined by applying the underpayment rate established under 26 U.S.C. § 6621 to the amount of the underpayment for the period of the underpayment.
The IRS states that individuals who are self-employed generally make quarterly estimated tax payments because the tax is not collected through withholding from wages.
Why self-employment tax is part of the picture
26 U.S.C. § 1401 imposes a tax on self-employment income, and the IRS directs sole proprietors to report business profit or loss on Schedule C (Form 1040).
26 U.S.C. § 1402(a) defines net earnings from self-employment as gross income derived from a trade or business carried on by the individual less the deductions attributable to that trade or business, so allowable business expenses reduce the base on which the tax is imposed.
26 U.S.C. § 164(f) allows an individual a deduction equal to one-half of the taxes imposed by 26 U.S.C. § 1401, other than the taxes imposed by § 1401(b)(2), for the taxable year.
What we are not saying here
Where this comes from
Every rule stated on this page comes from the law, the regulations, or IRS guidance, and each one is linked so it can be read directly.
- 26 U.S.C. § 6654 — Failure by individual to pay estimated income taxUnited States Code (GPO, govinfo) · 2023 edition · read 2026-08-15
- IRS Publication 505 — Tax Withholding and Estimated TaxInternal Revenue Service · 2026 · read 2026-08-15
- IRS — Estimated taxesInternal Revenue Service · current page · read 2026-08-15
- 26 U.S.C. § 1401 — Rate of tax on self-employment incomeUnited States Code (GPO, govinfo) · 2023 edition · read 2026-08-15
- IRS — About Schedule C (Form 1040), Profit or Loss From BusinessInternal Revenue Service · current page · read 2026-08-15
- 26 U.S.C. § 1402 — Definitions (net earnings from self-employment)United States Code (GPO, govinfo) · 2023 edition · read 2026-08-15
- 26 U.S.C. § 164 — TaxesUnited States Code (GPO, govinfo) · 2023 edition · read 2026-08-15
Still being read
These are questions on this page we have not finished reading the authority for. We list them rather than fill the space with a guess.
- No self-employment tax rate component, wage base or net-earnings multiplier is encoded. The topic carries the structure of the tax and the one-half deduction, and no arithmetic.
Where to go next
How we research this
Nothing here works out an amount for one person. It explains which rules apply so a driver knows what they are looking at, and what to bring to whoever prepares the return.
This page is educational. It is not tax advice, and it is not a determination about any one driver's return. A tax professional who can see the whole situation is the right person to apply these rules to it.