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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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hannah_fisher581mo ago
Brutal lesson to learn. I just use last year's total tax bill divided by four now.
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