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Old 10-05-2012, 09:12 PM   #1
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Self-employed/taxes

How much per pay check should be set aside to pay taxes (either quarterly or yearly)? 1/3?

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Old 10-06-2012, 06:39 AM   #2
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Re: Self-employed/taxes

It would really depend on what you make as to what your tax burden would be. I don't pay in quarterly, we just have an extra $75 taken out of my husbands check (twice a month). By doing this we get a reasonable amount of refund. Probably next year we'll reduce the amount we pay in b/c I'm making less than I was a few years ago.
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Old 10-06-2012, 07:28 AM   #3
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Re: Self-employed/taxes

I always did the 30% rule and if I didn't need it, well.. money in the bank!
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Old 10-06-2012, 02:20 PM   #4
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Re: Self-employed/taxes

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Originally Posted by 2queens&1princenmyhouse View Post
It would really depend on what you make as to what your tax burden would be
It's very hard to tell how much because it depends entirely upon how much you make and how many deductions you have. Plus the tax code is going to be different for next years taxes if the Bush Tax Cuts lapse..... Just for reference sake - DH was self employed as a contractor for years - what we "made" and what we deducted meant in the end that on paper our tax burden was very different than just a flat "we made X dollars which means we pay X % in taxes".....

If i were you and i would err on the side of saving too much.... better to not need it than to not have it saved kwim?
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Old 10-06-2012, 06:21 PM   #5
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One third is a pretty safe amount in my experience.
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Old 10-07-2012, 01:06 PM   #6
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Originally Posted by 2queens&1princenmyhouse
It would really depend on what you make as to what your tax burden would be.
Exactly. It will vary based on your tax rate/dependents/deductions. But I agree that 1/3 is not a bad place to start as 35% is the maximum rate for regular income (capital gains and other income can make the rate higher but I'm guessing you're just talking about standard earnings).. Hope this helps.
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Old 10-07-2012, 03:01 PM   #7
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Re: Self-employed/taxes

I think that's a reasonable place to start. It'll vary, of course, but you should be good with that amount.
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Old 10-07-2012, 05:46 PM   #8
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Great! It's actually for my mom and she doesn't make very much. So we'll plan on 1/3 and then if there's left over shopping!!!
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Old 10-07-2012, 09:33 PM   #9
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Re: Self-employed/taxes

I earned around 26k last year in self employment income and only had to pay the 12.8 percent for social security (employer + employee share). I also had a child and husband that brought down my tax burden to virtually nothing. It definitely depends on a number of factors. I think 1/3 is a little high, but every situation is different and better safe than sorry.
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Old 10-08-2012, 09:53 AM   #10
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Re: Self-employed/taxes

I think a third is great. We set aside 1/3 when we do any independent work. Because of our other income it works out just about perfect most years. One year I only did 20% thinking that our low income and student status wouldn't hurt us so much and we ended up having to come up with extra.
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