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Looking back at my first year's tax bill still makes me wince
I was going through old files and saw I paid over $4,000 in taxes from my first full year freelancing. I found the exact number on my 2019 return and it was a shock because I hadn't set anything aside. How do you handle your quarterly payments now to avoid that panic?
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kimr9116d ago
Oof, that first tax hit is brutal. I do something like what john506 said, but I use a simple percentage. Every time a client pays me, I take 30% right off the top and move it to a savings account I don't touch. It's not for spending, it's just for taxes. That way, when the quarterly payment is due, the money is already sitting there. I even set a calendar reminder for the deadlines so I don't forget to actually send it in. It takes the panic out completely.
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sethm5816d ago
How do you decide on that 30 percent number? I've heard some people say 25 and others say 40, so I'm curious what goes into picking your rate.
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john50616d ago
Remember my buddy who got hit with a huge bill because he forgot about sales tax. He just opened a separate bank account and moves a cut of every payment straight into it.
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