Comments on: Death and Taxes. Well, Taxes, Anyway.

By: Amy Maffei

Amy Maffei — Thu, 05 Jun 2008 23:51:29 +0000

Thanks for addressing this in a post. It’s something that everyone should know about.

I place about 30% of everything I make into a bank account (to be safe), and I draw from that to make quarterly federal and state payments that my accountant set up. (He gave me the slips and amounts to send based on last year).

Last year I sent off about 33%, which turned out to be too much! So my only comment is that one should remember that freelancers might not need to send in extra each time if one’s taxes will itemize expenses and take off for business items, because this plays against the amount the freelancer will owe. Hope that makes sense!

By: Michele

Michele — Thu, 05 Jun 2008 15:59:37 +0000

Great advice, Lorna! Actually, my mom has always been quite the business woman. I watched her keep money back like this–always. She’s like you–she refuses to get into that money!

*smiles*
Michele

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By: Selene M. Bowlby

Selene M. Bowlby — Wed, 04 Jun 2008 20:14:44 +0000

Great idea to have a separate tax savings account – I set one up a few months ago, too. You’re right it hurts so much knowing that a big chunk of each check you receive goes into that “for Uncle Sam / Do NOT Touch!” account – but, I’d be willing to bet it hurts a lot less than getting a penalty at the end of the year, not to mention having to scrounge up however much you owe, after you’ve already spent it.

I’m a bit more generous on my tax savings – I’ve been saving 30% this year (and getting ready to mail that off in the next day or two).

This is the first year I’ve made enough to have to pay estimated taxes, so I’m not going by last year’s estimation, but just guessing now. Hopefully I estimated too much and will get a nice refund come the next big tax day, LOL.

Thanks for pointing this out, though – I’m sure there are lots of freelancers who aren’t aware of the tax issues. The separate tax savings is definitely a big help to make sure you don’t dip into the tax money!

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By: Lorna Doone Brewer

Lorna Doone Brewer — Wed, 04 Jun 2008 19:16:11 +0000

@Billie – I love it that my sister-in-law is a tax attorney. (The other one’s a doctor, and that’s pretty handy, too.)

@holli jo – Try poking around here: http://www.irs.gov/businesses/small/article/0,,id=115045,00.html.

By: holli jo

holli jo — Wed, 04 Jun 2008 17:17:36 +0000

Yikes. I’m very worried about getting penalized for not paying my taxes quarterly. I’ve already missed the first deadline though…

Anyone know where to find out information on paying quarterly taxes? The IRS web page perhaps?!

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By: Billie Gaura

Billie Gaura — Wed, 04 Jun 2008 16:18:00 +0000

Great post! When I consult with folks who are considering leaving their jobs (where their taxes are withheld for them), I always suggest they meet with a CPA first. Many CPA (or similar type of folks) will meet complimentary the first time and even if you had to pay a couple hundred bucks to get some guidance, it’s money VERY well spent. Nothing takes the wind out of a new feelancer’s sails like an instantly depleted business account, come April 15th.