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My accountant insisted I set aside 40% of every check for taxes, and I'm so glad I listened after that surprise $8k bill.
I argued that 30% was enough, but she showed me how quarterly payments and a high-income year in Charlotte would stack up, so who else has gotten burned by underpaying their estimated taxes?
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dianawilson5mo ago
My first year freelancing in Austin I only saved 25% and got hit with a $5,000 penalty. I thought my regular job withholding would cover it, but nope. Now I do the full 40% like your accountant said and it hurts to stash that much, but the peace of mind is totally worth it. Getting that penalty notice was a brutal way to learn.
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bell.jessica5mo ago
Yeah that "peace of mind" part is the real key. I mean, it's not just about avoiding the penalty. Stashing that 40% forces you to live on way less from the jump, so you never get used to having the full amount. It basically stops lifestyle creep before it even starts. Idk, maybe it's just me but getting that tax bill and having it already covered feels kinda powerful, like you beat the system a little.
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sean485mo ago
Man, I used to think that was overkill, but your story totally changed my mind.
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