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Just did my estimated taxes and realized I owe an extra $3,200 I didn't plan for
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the_mary2d ago
Did @white.keith already try the safe harbor trick or are you flying blind like the rest of us?
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the_hayden5d ago
Hold on a minute. I think you might be looking at this the wrong way. You didn't really "owe" that money out of nowhere. You just didn't set it aside during the year when you earned it. If you're doing estimated taxes, that means you're self-employed or have side income, and the IRS expects you to pay as you go. It's not a surprise bill, it's the part of your paycheck you skipped. Next time, try putting 30% of each job payment into a separate savings account right away. That way April 15th is just a formality, not a heart attack.
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white.keith4d ago
Tack onto that point @the_hayden made about setting aside 30%. The real shocker for most people is when they hit the underpayment penalty. You can owe zero extra tax and still get slapped with a fine if you didn't pay enough through the year. I learned that the hard way after a good freelance year where I thought I was in the clear. Now I always check the safe harbor rule paying at least 100% of last year's tax or 90% of this year's to dodge that completely.
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