As freelancers, we don’t have taxes withheld from our paychecks by our bosses. Which is awesome, because it means we don’t have bosses.
It does mean that, in the U.S. at least, we need to be responsible and pay our income and self employment taxes on time. For many freelancers, that means paying quarterly taxes. The government must use math in a different way than the rest of us, because the quarters aren’t quite quarters:
- Taxes for Jan, Feb, March were due April 17, 2012
- April and May are due in June
- June, July, August are due in September
- September, October, November and December are due in January
It can be painful to write checks to the government every few months. Freelancers need to plan for taxes. I suggest setting aside a percent of every payment you receive to pay taxes. The percent will vary depending on your situation, so talk to an accountant. I’ve heard general recommendations ranging from 25% up to 45%.
Sometimes my husband sees a check from a client and his eyes light up at the amount. I have to remind him that about a third doesn’t belong to us.
How do you handle saving for tax payments?