Do You Put Money Away For Your Tax Bill?...

39 replies
My accountant is coming to see me later to let me have all my facts and figures for the end of the year before she files my return. (gulp)

As I'll have to have my tax bill (whatever it is) paid for the end of the month, I'm hoping I've salted enough away for it.

Question:_ Do you put your tax money away every month, and if not, why not. (Because it has to be paid)

Cheers
Kim
#bill #money #put #tax
  • Profile picture of the author Peter Bestel
    Kim,

    To put money away in anticipation of your tax bill is great advice Kim. It's a shame that this thread probably won't get the views it deserves because anything to do with taxes is seen as not sexy.

    Well, if you were to over-estimate your daily/monthly tax bill and stash it away in a high interest account (if they exist now!), when it comes to paying the government you'd more than likely have a nice little sum left over to treat yourself with. Now that's pretty sexy.

    Peter
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  • Profile picture of the author Suzanne Morrison
    Hi Kim,

    I keep a very rough calculation in a spreadsheet of how much I am going to pay, but I don't put that exact amount in a specific account I just try to put my savings in general in a variety of places with good interest rates (getting harder these days).

    I keep the rough calculation so that I won't be in shock when I find out what the figure is and also so I have that money in a place that is easily accessible

    The good thing is that I am getting paid in US $ and as you have probably noticed as well, the recent drop in the value of the £ has meant a nice payrise.

    Cheers,
    Suzanne
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  • Profile picture of the author Tim_Carter
    In Canada we have to make quarterly payments above a certain income ($30k / anum I think) so yes my taxes are all paid by the time I file - or I owe a small amount.

    I might get a refund as I invested big in Tax deferred investments (RRSP)
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  • Profile picture of the author curious1960
    I am bracing for major problems with tax man this year....no payments have been made and I will owe a bunch plus possible penalties....Taxes are real and this tread s/b major one...
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    • Profile picture of the author Michele Miller
      I pay estimated quarterly taxes, and have done for years. It's part of running a business. Not the best part, but a neccessary part unfortunately.

      Michele
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      • Profile picture of the author Dayne Dylan
        Banned
        Originally Posted by Michele Miller View Post

        I pay estimated quarterly taxes, and have done for years. It's part of running a business. Not the best part, but a neccessary part unfortunately.

        Michele
        Yep, ditto.
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  • Profile picture of the author Thomas Wilkinson
    Quarterlies are the way to go for me. I have a really good
    tax lady and she keeps me on track for everything. Self
    employed people are much more likely to get audited so it
    pays to be extra vigilant.

    Tom
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  • Profile picture of the author kristinecpa
    I put money aside each time I "pay" myself (usually monthly). I put it in a money market that's making at least a little interest, then pull it out when it's time to make my quarterly tax payments.

    As a tax person, this is what I recommend my clients do as well. It helps avoid penalties, and also allows you to earn a little interest until you have to pay your estimates/tax bill.
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    • Profile picture of the author Collette
      I do pretty much the same thing Suzanne does, keep a rough estimate and try to make sure I have that amount in reserve. I don't do quarterly, because my inclome fluctuates, and I hate giving the government money earlier than I have to.

      My accountant rocks though, and I always wind up paying almost nothing in taxes.
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      • Profile picture of the author Jagged
        I'm just starting out in marketing, so I really don't have much to worry about this tax year, but....next year, watch out!!!
        I have run businesses in the past, which I will structure my marketing in the same way.
        I have 3 accounts set up.
        1 is personal
        1 is business
        1 is a tax account.
        Money I make would first go to the business account. From that, I transfer an estimate tax to my tax account. For the personal account I would "pay myself" a wage, and stick to it... one that I could live on, pay bills, etc...the rest stays in the business account...soley for the business, to be used for new programs, business marketing & advertising, outsourcing, info products, seminars, etc...
        (which are all tallied as business expenses for next tax year).
        The tough part is to train yourself to stick to the plan!! It's so easy to think...wow...a check for $5,000.00, and to say "I have $5,000" then go blow it all......when in fact you don't...YOU may see $2,500 personally out of it all.... $1,000 for tax, $1,500 for business.
        More people get into serious trouble thinking it's all their's.
        It worked well for my prior businesses and I plan to carry this method over to my marketing.
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  • Profile picture of the author sevenish
    As others have explained upthread, in the Us we have to pay estimated quarterly taxes.

    Having gone through a full IRS audit last year and coming out of it ok, I'll continue to do so.

    P.S. Audits really suck
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  • Profile picture of the author Ken Preuss
    Yep. Necessary evil that we all have to deal with.

    My issue is my CPA can never find enough expenses to deduct. That's the beauty and curse of IM - it's a business that can often have insanely low overhead compared to revenue.

    But as I always say to her, I'd rather have extremely low expenses than extremely low revenue.

    Ken
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    • Profile picture of the author Jenni Mac
      Oh I know that date Kim - 31 January!!

      I've set aside next week Monday to file mine online - usually I do it the last week of January.

      Have I got enough money to cover it? Pretty sure I do!

      Good luck for later.
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    • Profile picture of the author Dixiebelle
      Originally Posted by Ken Preuss View Post


      I'd rather have extremely low expenses than extremely low revenue.

      Ken
      ************************************************** ********

      I'm with you Ken. I wish I owed a million dollars a year in taxes, since my tax bill is about 1/3 of my true income. The higher the tax bill, the higher your gross revenue.

      I have a business license so I have to pay quarterly state and federal taxes. It works out really well since there is a lot less to pay at the end of the year.

      Dixie
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  • Profile picture of the author Writing Pete
    Gulp, I didn't even think about this. Thanks for reminding me, or else I would have been scrambling at the last minute!
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  • Profile picture of the author DebbieB
    I pay my taxes in advance - every two months. My income is estimated for the year and I pay a percentage of that on a regular basis so that I won't get hit with a big bill at the end.

    Much the easiest way for me.

    Debbie
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  • Profile picture of the author Hanuka
    Why you guys pay taxes?.. I mean.. for what?
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  • Profile picture of the author jhiggins
    You bet I do!! Nothing is worse than trying to come up with money in April. It just isn't there. I take out 30% of everything and just set aside in a savings account.
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  • Profile picture of the author Chaiwriter
    Yeah, I pay quarterly taxes too... in the US you have to do this or you will face penalties at the end of the year.

    Taxes are horrible but they are a given....

    Chai
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  • Profile picture of the author Hanuka
    How do they know how muche ure earning from the internet?? :/
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    • Profile picture of the author Peter Bestel
      Originally Posted by Hanuka View Post

      Why you guys pay taxes?.. I mean.. for what?
      Originally Posted by Hanuka View Post

      How do they know how muche ure earning from the internet?? :/
      Interesting viewpoint.

      Stupid, but interesting.
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      • Profile picture of the author Hanuka
        [DELETED]
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        • Profile picture of the author Hamida Harland
          [DELETED]
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          • Profile picture of the author Anthony Hull
            I agree,

            Even though I HATE paying tax (and believe 40% is WAY too much), it isn't morally acceptable not to pay it when everyone (except people like Hamida) has to pay and contribute to society.


            Originally Posted by Hamida Harland View Post

            The fact is that it's illegal. If everyone else has to pay taxes why shouldn't IMers?
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            • Profile picture of the author Hanuka
              [DELETED]
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              • Profile picture of the author jmidas
                quarterly payments plus setting aside some more just in case the the quarterlies fall short.

                You have to save and account for taxes or tax day becomes a nightmare.
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        • Profile picture of the author Peter Bestel
          Originally Posted by Hanuka View Post

          As far as I'm concerned; making the goverment believe that you're a bum shouldn't be so hard to achive...
          Well I've got to agree with you there - you've convinced me.
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          • Profile picture of the author John Taylor
            Hanuka,

            As I mentioned in the infraction I gave you, suggesting
            that anyone does something illegal is both irresponsible
            and stupid. Peter was right to call you out.


            John
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          • Profile picture of the author Hanuka
            Originally Posted by Peter Bestel View Post

            Well I've got to agree with you there - you've convinced me.
            WTF it has to do with the above?

            I didn't say it to convince anyone. I just said how things are.. imo

            Originally Posted by John Taylor View Post

            Hanuka,

            As I mentioned in the infraction I gave you, suggesting
            that anyone does something illegal is both irresponsible
            and stupid. Peter was right to call you out.


            John
            Irresponsible, ..maybe.

            Stupid.. far from it.
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    • Profile picture of the author Kim Standerline
      Why don't you pay taxes in the 10th kingdom?

      Originally Posted by Hanuka View Post

      How do they know how muche ure earning from the internet?? :/
      If you're stupid enough to be taking money online thinking the tax man isn't going to catch up with you, then God help you when he does.
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  • Profile picture of the author TiffanyLambert
    I get SO confused with taxes. I wish they'd do away with it already. First (a long time ago), I just filed once a year. Got a refund in most cases. LOL

    Then I started having to pay. (shocker when you're used to getting)

    Next I started having to pay quarterly.

    Now I find out I get penalized if I don't pay by the 15th of EACH month! So that's what I've been doing now for a couple of years.

    Seems the more you make the harder it gets.

    I dread tax season. I can't decide if it was better to be broke during the year and get a $4,000 return or make a lot each year and pay a lot each year.

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  • Profile picture of the author Lambert Klein
    We make quarterly payments. When you are self employed that's what they want.

    Lambert
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  • Profile picture of the author Hanuka
    Because, unlike people with "normal jobs" we don't have to have a pimp
    who reports all our doings to the goverment..
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    Advertising is 85% confusion and 15% commission.. ROFL! xD

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  • Profile picture of the author Anthony Hull
    I was in credit for January as I overpaid last April

    I've been putting away 40% of whatever I withdraw towards my tax.

    Cheers,

    Anthony
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  • Profile picture of the author Steven Carl Kelly
    Originally Posted by Kim Standerline View Post

    Question:_ Do you put your tax money away every month, and if not, why not. (Because it has to be paid)
    Absolutely. I take my projected earnings and from that develop a projected tax obligation, then divide it up into 12 and each month I have an automatic transfer from my regular accounts to my tax payment account.
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  • Profile picture of the author R Hagel
    And just a reminder for folks in the U.S. who pay quarterly -- your next payment is due tomorrow (Jan 15th).
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  • Profile picture of the author Steven Carl Kelly
    There are perfectly legal ways to reduce your tax obligations. My CPA is a former IRS'er.
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  • Profile picture of the author John Taylor
    Kim,

    To answer your question yes, I have a business
    reserve account and I set aside an appropriate
    amount each month.

    Secondly, there are many strategies available
    to all businesses to minimise their tax liability and
    I strongly recommend that anyone who doesn't
    have an accountant gets one!

    John
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