The day I switched from quarterly estimates to a SEP IRA after my accountant showed me my tax bill from last year...

I saw my 2023 tax bill dropped by $1,200 just by putting 20% of my income into a SEP IRA instead of sending it all to the IRS, and it only took 3 months to see the difference in my refund.

3 comments

3 Comments

parker_hall53d ago

Honestly, the SEP IRA move is a game changer for someone with variable income. I was in the same boat when my side hustle started taking off and my tax guy showed me the damage. Putting that 20% aside before I even saw the cash was the only way I could actually stick with it, and seeing that $1,200 drop in my refund was the proof I needed. Tbh it's the easiest way to avoid that shock at tax time without overcomplicating things.

the_robin3d ago

lol I feel this so hard. @taylor.brooke your buddy Derek is me except I didn't listen the first time and got hit with a $3,200 surprise my second year. Now I stash 18% of every freelance check into my SEP before I even look at the balance. Seeing that refund go from zero to actually getting money back feels like winning a stupid game I should have just played right the first time.

taylor.brooke3d ago

My buddy Derek got hit with a $4,000 tax bill his first year of freelancing and totally freaked out. He came to me for advice and I just told him to check out what @parker_hall5 was saying about the SEP IRA move. Derek started putting 15% of every check into his SEP and by the end of the year his tax bill dropped by almost $1,800. The thing that sealed it for him was when he saw his refund actually came back with extra money instead of owing more. He's been doing it for two years now and says it's the only reason he's not still stressed every April.