TIL I've been doing my quarterly taxes wrong for two years

I was putting together my stuff for my tax guy, and I saw a note from him on last year's return. It said my estimated payments were about $800 short. I just figured I'd messed up the math once. But then I looked at my bank statements from the last eight quarters. EVERY single time, I'd sent the IRS 25% of my profit. Sounds right, right? Nope. I forgot that as a sole proprietor, I'm also paying the employer half of my Social Security and Medicare. That's another 7.65% on top. The moment it clicked was seeing my total tax owed for 2023 versus what I'd actually paid. I felt so stupid. I've basically been giving myself a surprise bill every April. How do you guys figure out the right amount to send so you don't get hit with a penalty?

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4 Comments

hannah_fisher586mo ago

Brutal lesson to learn. I just use last year's total tax bill divided by four now.

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derekhunt6mo ago

You sent only 25% for eight straight quarters? That's brutal!

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troychen6mo ago

Tell me about it (we had the same thing happen last year). Watching those numbers stay flat for so long is just painful. Really makes you question everything.

1

amyh124mo ago

The flat numbers are a trap cause they make you think you're fine when really the IRS is just quietly racking up interest on the back end. That silent compounding is what really gets you.

2