Just realized my quarterly estimated tax approach was way off

I've been comparing how I handled estimated taxes last year versus this year. Last year I just guessed and paid $400 each quarter, ended up owing $1,200 in April. This year I started using a simple spreadsheet to track my actual income from freelancing in Atlanta, and my payments are way more accurate. Has anyone else had a big difference when they actually calculated instead of guessing?

3 comments

3 Comments

rivera.hannah14d ago

Guessing beats tracking when your income jumps around too much.

kim_davis14d ago

Oh man, "income jumps around too much" hits hard. I learned the hard way that setting aside a flat 30% of every paycheck (even the small ones) saves so much headache come April.

henry_anderson5413d ago

Honestly the guessing approach works until it DOESN'T and then you're screwed. I saw a buddy get hit with a massive tax bill because he "guessed" low on a good year and spent the rest. The real trick nobody talks about is using last year's average as a floor not a ceiling. Take whatever you think you owe and add 10% to be safe. That way if you overshoot you get a refund instead of a nasty surprise. Also banks have free calculators for estimated taxes now no need to guess blindly.