Reminder, self employed folks! Your quarterly estimated payment is due on Monday, June 16. I just mailed mine yesterday (and don’t bother trying to read my return address, you weirdos – it’s a P.O. box).
When you’re self employed (with some exceptions), you pay the government your taxes four times a year based on what you think you’ll owe. So four times a year, I send money off and then, in April, harumph when I hear most traditonally employed folks squeeing about their tax refund checks. If I’ve overpaid, I could get a refund in April, but instead I just apply that to whatever I owe in my first estimated payment of the year (if I’ve underpaid, I need to pay the balance PLUS my first estimated payment of the year. It’s…unpleasant). I don’t figure this out on my own. My accountant does that.
Taxes can be a huge stressor if you’re not on top of setting aside money to pay said taxes. As soon as a check or direct deposit comes in, I send 20% of that payment to a savings account earmarked for taxes (plus funds to accounts for savings and retirement). I keep my taxes fund in a separate online bank versus a savings account in the same bank where I have my checking. I do that because it’s less tempting to just slide $50 from taxes to checking if I want to buy something fancy.
I try not to let taxes get me down. Setting money aside is one way to prevent that. Another is that, while realizing how much more I pay in taxes than if I were traditionally employed, calculating expenses I don’t have – things like gas, tolls, and work clothes. I had to drive during rush hour last week. It confirmed that we’re all far better off with my daily commute consisting of walking the dog.