Question 1

How is self-employment tax calculated?

Accepted Answer

Self-employment tax covers Social Security and Medicare contributions that employers normally split with employees. As a freelancer, you pay both halves. It's calculated on 92.35% of your net profit, then multiplied by your country's self-employment rate.

Question 2

What is the difference between gross income and net profit?

Accepted Answer

Gross income is everything clients pay you before any deductions. Net profit is gross income minus your deductible business expenses. Tax is calculated on your net profit, not your gross income, so tracking expenses directly reduces your tax bill.

Question 3

Why is my take-home pay lower than my net profit?

Accepted Answer

Net profit is your income after business expenses but before tax. Take-home pay is what's left after self-employment tax, federal/national income tax, and any state or regional tax. The gap between the two is your total tax liability.

Question 4

Does GigTax store my financial information?

Accepted Answer

No. All calculations run entirely in your browser. Nothing is sent to a server, stored, or tracked. Refreshing the page resets all values.

Question 5

Is GigTax a substitute for professional tax advice?

Accepted Answer

No. GigTax provides estimates based on published tax brackets to help you plan and budget. Tax rules change and individual circumstances vary, so always confirm with a qualified accountant or tax professional before filing.

Question 6

How often is the tax data updated?

Accepted Answer

GigTax uses 2026 tax brackets for each supported country and region, sourced directly from official government and tax authority publications. We update annually when new brackets are published.

Question 7

My country or region isn't listed. What should I do?

Accepted Answer

Browse the full list on the Countries page. If your specific region isn't available, use your country's national default estimate as a starting point.

Question 8

Do freelancers have to pay taxes quarterly?

Accepted Answer

In most countries with progressive tax systems, yes. If you expect to owe a meaningful amount for the year, you're generally required to pay estimated taxes quarterly rather than one lump sum at year end. In the US, quarterly payments are due in April, June, September, and January. GigTax shows your estimated quarterly figure automatically based on your income and expenses.

Question 9

How do I calculate my quarterly estimated tax payment?

Accepted Answer

Divide your estimated total annual tax liability by four. For example, if GigTax estimates your total tax at $20,000 for the year, your quarterly payment is $5,000. The exact due dates vary by country, and the deadline countdown on each calculator page shows your next filing date.

Question 10

What happens if I don't pay quarterly estimated taxes?

Accepted Answer

Underpaying estimated taxes results in a penalty on the underpaid amount for the period it was late. In the US, the IRS penalty is the federal short-term rate plus 3%, calculated per quarter. Paying on time, even if it's just an estimate, avoids penalties entirely.

Question 11

How much should a freelancer set aside for taxes?

Accepted Answer

A common rule of thumb is 25-30% of every payment received. The exact amount depends on your country, region, income level, and deductible expenses. Use GigTax to get a precise estimate based on your actual numbers.

Question 12

What counts as a business expense I can deduct?

Accepted Answer

Generally, any cost that's ordinary and necessary for running your freelance work: software subscriptions, a portion of home office costs, equipment, internet, professional development, and business-related travel. Keep receipts and consult a local tax professional for anything borderline.

Question 13

Can I deduct my home office as a freelancer?

Accepted Answer

In most countries, yes. A portion of rent, utilities, and internet that relates to your workspace can be deducted. In the US, the IRS allows a simplified deduction of $5 per square foot up to 300 sq ft. Add it as an annual expense in the GigTax calculator to see the impact on your tax liability.

Question 14

Can I deduct my laptop and equipment?

Accepted Answer

Yes, in most countries. Equipment used primarily for business purposes is deductible. In the US you can often deduct the full cost in the year of purchase under Section 179. In the UK it falls under capital allowances. Keep receipts and document business-use percentage if you also use the device personally.

Question 15

What records should I keep for tax purposes?

Accepted Answer

Keep records of all income (invoices, payment receipts, bank statements), all business expenses (receipts, invoices), equipment purchased, mileage logs if claiming vehicle expenses, and records of foreign income with the exchange rate on each payment date. Most countries require records for 5-7 years in case of audit.

Question 16

What is the self-employment tax rate in the US for 2026?

Accepted Answer

The US self-employment tax rate for 2026 is 15.3%: 12.4% for Social Security and 2.9% for Medicare. It applies to 92.35% of your net profit. You can deduct half of the self-employment tax when calculating your federal income tax, which partially offsets the cost.

Question 17

How much tax do freelancers pay in Nigeria?

Accepted Answer

Nigerian freelancers pay personal income tax under PITA using progressive brackets from 7% on the first ₦300,000 to 24% on income above ₦3.2 million. There is no separate self-employment tax. Lagos State uses LIRS for collection with a 1% minimum tax floor on gross income.

Question 18

Do freelancers in the UK pay National Insurance?

Accepted Answer

Yes. Self-employed workers pay Class 4 National Insurance on profits above the lower profits limit. GigTax approximates this as a 6% self-employment contribution on net profit for UK calculations.

Question 19

What is the difference between a sole trader and a limited company?

Accepted Answer

A sole trader is the simplest structure: you and your business are legally the same entity, paying income tax and self-employment contributions on all profits. A limited company is a separate legal entity that pays corporation tax, and you pay yourself a salary or dividends. At higher income levels a limited company often results in lower overall tax, but involves more administrative overhead.

Question 20

Do I need to register for VAT or GST as a freelancer?

Accepted Answer

It depends on your country and income level. In the UK, VAT registration is mandatory above £90,000 turnover. In Australia, GST applies above $75,000 AUD. GigTax calculates income tax only. VAT and GST are separate obligations not reflected in these estimates.

Question 21

How does foreign income affect my taxes?

Accepted Answer

Foreign income is generally taxable in your country of residence, converted to your local currency at the exchange rate on the date received. Most countries have tax treaties to prevent double taxation. If you've already paid tax in the client's country, you may receive a credit against your local liability.

Question 22

Should I invoice clients in USD or my local currency?

Accepted Answer

Invoicing in USD or EUR protects you from local currency weakness. If your currency devalues, your USD earnings are worth more locally. Invoicing in your local currency transfers the exchange rate risk to the client. There is no universal right answer, but knowing the live rate before sending an invoice helps you price correctly. Use our currency converter for reference.

Frequently asked questions

How GigTax works

Quarterly taxes and payments

Deductions and expenses

Country-specific questions

Foreign income and currency