In which I share my 10 emotional responses to paying my taxes and having $41.51 left over.
I think the answer is: pay what I can on April 15, pay 20 percent over the rest of the year, and keep my eyes open for places to catch up, because I'll need to catch up at some point.
"Having a high tax bill is always good news for me, because it means I had high income."
I was walking home from work the other day when I realized that it had finally happened. I had reached the day where I couldn’t reasonably put off doing my taxes any longer. That got me thinking, how many other jerks are in the same boat? So, in an almost perverse fit of procrastination, I started digging around online for somedata. Instead of, you know, firing up TurboTax.
Every month, I need to put 20 percent of my income towards taxes, 20 percent towards debt, and 10 percent towards savings.
"I agree that my federal taxes are too low. I don't think someone living off of dividends and capital gains ought to be paying a lower rate than a middle-class wage earner."
Now, just to be clear, I think taxes are great. I'm happy to pay my share. But sometimes you can get a number like that and think "wow, that means I'm going to have to spend the entire year staying in the same place."
I'm curious to know how other freelancers, small business owners, and variable income earners handle the "estimated income" discussion. Do you provide extrapolated income data based on the first quarter of the current tax year? Do you consider how your income rose and fell in previous years and estimate accordingly?