Just realized I was overcomplicating my quarterly tax payments

I started setting aside 30% from every single payment into a separate account, and for the first time I had the cash ready in April. Anyone else use this simple bucket system?

4 comments

4 Comments

dakotag262mo ago

That 30 percent rule is basically what saved me from tax panic last year.

ben_fisher2mo agoMost Upvoted

My tax guy swears by setting aside 35% for freelancers.

aliceharris18d ago

30% is solid but 35% gives you a real cushion if you hit a higher bracket or owe self employment tax on top of income tax. I do 30% into a separate savings account and then an extra 5% into a high yield account for surprises like underpayment penalties or if I forget a deduction. That extra 5% has bailed me out twice when I had a big contract that pushed my taxable income way up and I owed more than just the standard 30%. Plus if you end up over saving you get a nice little bonus refund in April instead of scrambling.

shane1652mo ago

It's funny how the best fixes are usually the simplest ones... we just get in our own way.