I was grabbing coffee with a fellow freelancer in Denver last month, and she mentioned she puts 40% of every check straight into a separate savings account for taxes.

4 comments

4 Comments

Forty percent sounds like a lot but @victor651 have you actually run the numbers on what you owe after a good year? I'm asking because I know a guy who does landscaping on the side and he got hammered one year, owed almost 35% and had nothing put away. He ended up doing payment plans with the IRS for three years. What do you use to figure out your actual percentage?

victor6512mo ago

Forty percent just for taxes? That's not a savings account, that's a hostage situation. My accountant would have a heart attack if I tried that.

anthonyrivera2mo ago

Seriously, @victor651, that's not saving, it's just giving the government an interest-free loan.

abbyf792mo ago

But what's the actual benefit of letting them hold it all year?