Being self-employed in Colorado can be rewarding. You work on your own terms, choose your clients, and control your income. But when tax season arrives, many freelancers, gig workers, and small business owners feel overwhelmed.

If you are self-employed, taxes are not automatically deducted from your income. This means you must calculate, save, and pay your own taxes. Without proper planning, this can lead to surprise tax bills, penalties, or cash flow problems.

This blog is a complete and simple guide to Colorado self-employed taxes for 2025 – 2026. It explains what taxes apply to you, how much you may owe, when payments are due, and how to reduce your tax burden legally. Everything is written in plain language so anyone can understand it.

What Are Self-Employed Taxes?

Self-employed taxes are the taxes paid by individuals who work for themselves rather than earning wages from an employer. This includes freelancers, consultants, independent contractors, gig workers, and sole proprietors. Because there is no employer involved, you are responsible for reporting, calculating, and paying your own taxes.

Self-employed taxes are the taxes you pay when you work for yourself instead of earning a regular salary from an employer.

In simple terms, they include:

• Income tax on the money you earn
• Self-employment tax (Social Security + Medicare), because no employer is paying this for you
• State taxes, depending on where you live

If you’re self-employed (freelancer, consultant, sole proprietor, gig worker), you must:

• Report your income yourself
• Pay estimated taxes during the year
• File taxes using forms like Schedule C and Schedule SE

Basically, self-employed taxes cover both the employee and employer tax share, which is why they’re higher than regular paycheck taxes.

Who Is Considered Self-Employed in Colorado?

You are considered self-employed in Colorado if you earn income independently and no employer withholds taxes for you. This includes freelancers, independent contractors, consultants, gig workers, sole proprietors, and single-member LLC owners.

If you receive 1099 income, run a small business, sell online, or provide services on your own, you fall into this category. Even part-time self-employment income counts.

If your net earnings from self-employment are $400 or more, federal law requires you to file self-employment taxes.

Why Self-Employed Taxes Feel More Complicated

Employees usually do not see how taxes work. Employers withhold income tax, Social Security, and Medicare automatically. Self-employed individuals must handle all of this themselves.

You are responsible for tracking income, keeping records, calculating taxes, making quarterly payments, and filing returns correctly. Income may also vary month to month, which makes budgeting harder.

Once you understand the system, however, self-employed taxes become much more manageable.

Federal Self-Employment Tax Explained

Self-employment tax is a federal tax that covers Social Security and Medicare. Employees split this tax with their employers. Self-employed individuals pay both portions.

For 2025 – 2026, the self-employment tax rate is 15.3 percent. This includes 12.4 percent for Social Security and 2.9 percent for Medicare. Higher-income earners may owe an additional Medicare surtax.

The IRS only applies this tax to 92.35 percent of your net business income, not the full amount. You can also deduct half of the self-employment tax when calculating your adjusted gross income.

Federal Income Tax for Self-Employed Individuals

In addition to self-employment tax, you must pay federal income tax. Your income tax rate depends on your total taxable income and filing status.

Self-employed income is reported on Schedule C, where you list income and subtract business expenses. The remaining profit is taxed.

Failing to plan for both income tax and self-employment tax is a common mistake that leads to large tax bills.

Colorado State Income Tax for Self-Employed People

Colorado has a flat state income tax rate, which makes things simpler than many other states.

For 2025 – 2026, Colorado charges a flat income tax rate on taxable income, regardless of how much you earn. This rate applies to self-employed individuals as well.

You report your income on Colorado Form 104, along with your federal return information.

Colorado does not have a separate self-employment tax. You only pay state income tax on your net earnings.

Do Self-Employed People in Colorado Pay Quarterly Taxes?

Yes. Most self-employed individuals are required to make quarterly estimated tax payments to both the IRS and the state of Colorado.

You usually need to make estimated payments if you expect to owe $1,000 or more in federal tax after credits.

Quarterly payments help prevent large tax bills and penalties at the end of the year.

Colorado Estimated Tax Payment Deadlines

Estimated tax payments are generally due on the following dates:

• April 15
• June 15
• September 15
• January 15 of the following year

Colorado estimated payments are typically made using Form 104EP.

Missing these deadlines can result in interest and penalties, even if you pay later.

Common Tax Deductions for Colorado Self-Employed Individuals

One of the biggest benefits of being self-employed is the ability to deduct business expenses. Deductions lower your taxable income and reduce how much tax you owe.

Common deductions include office supplies, internet and phone expenses, business software, marketing costs, professional services, education, and business insurance.

If an expense is ordinary and necessary for your business, it may be deductible. Always keep receipts and records.

Home Office Deduction Made Simple

If you use part of your home regularly and exclusively for business, you may qualify for the home office deduction.

You can choose the simplified method or the actual expense method. The simplified method allows a flat rate per square foot. The actual method allows you to deduct a portion of rent, utilities, insurance, and maintenance costs.

Colorado follows federal rules for the home office deduction.

Vehicle and Mileage Deductions

If you use your vehicle for business purposes, you may deduct those expenses. This includes driving to client meetings, job sites, and business errands.

You can choose the standard mileage method or the actual expense method. Keeping a mileage log is important to support your deduction.

Personal commuting does not qualify as a business expense.

Health Insurance and Retirement Deductions

Self-employed individuals can deduct health insurance premiums if they are not eligible for employer-sponsored coverage. This includes medical, dental, and vision insurance.

You can also reduce taxes by contributing to retirement plans such as a SEP IRA or Solo 401(k). These contributions help lower taxable income while building long-term savings.

Sales Tax Responsibilities in Colorado

If your business sells taxable goods or services, you may need to collect and remit Colorado sales tax.

Colorado has state and local sales tax requirements that can vary by location. You must register with the Colorado Department of Revenue and file sales tax returns if applicable.

Sales tax collected is not your income and must be handled carefully.

How to File Self-Employed Taxes in Colorado

At the federal level, self-employed individuals file:

• Form 1040
• Schedule C
• Schedule SE

For Colorado, you typically file:

• Form 104
• Form 104EP for estimated payments

Many people use tax software, while others work with a tax professional to ensure accuracy.

What Happens If You File Late or Do Not Pay?

Late filing or underpayment can result in penalties and interest from both the IRS and the state of Colorado.

If you cannot afford to pay your taxes in full, it is still important to file on time. Filing late usually results in higher penalties than paying late.

Cash flow issues are common during tax season for self-employed individuals.

Managing Cash Flow During Tax Season

Self-employed income is often unpredictable. Clients may pay late, expenses may rise, or income may slow down just as taxes are due.

Having access to short-term funds can help you stay compliant and avoid penalties.

How Beem Everdraft™ Can Help During Tax Time

When money is tight and tax deadlines are approaching, Beem Everdraft™ for Instant Cash Advance up to $1000 can help bridge the gap.

It provides quick access to funds that can be used for tax payments, filing fees, or urgent business expenses. This can help prevent late payments and added penalties while you stabilize cash flow.

You can learn more here: https://trybeem.com/get-instant-cash-advance

Simple Tips to Stay Tax Ready All Year

Track income and expenses regularly instead of waiting until tax season. Set aside a portion of every payment for taxes. Make quarterly payments on time. Keep personal and business finances separate.

Planning ahead makes self-employed taxes far less stressful.

File your federal and state taxes online with Beem. You can claim all the tax credits and deductions you are eligible for and file all forms, combinations, and filing statuses, including multi-state filing. You can also try Beem’s free Tax Calculator for an accurate federal and state tax estimate.

Frequently Asked Questions About Colorado Self-Employed Taxes

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