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It’s Tax Day!

April 15, 2015

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What you need to know about paying quarterly taxes as a freelancerApril 15th is here already. Where has the first quarter of 2015 gone?! Today may not seem like a monumental day to you, but some are rejoicing or dreading today as it’s the day that income tax returns are due (unless you got an extension, but that’s another story!)

I got my taxes done by my accountant again this year and he finished them up mid-March.

After I started freelancing in July, I saved 30% of all my freelance income in case I had to pay in to taxes for 2014. I had nearly $1,500 saved up for that purpose alone. But when I went to find out how my tax return ended up, I was surprised to learn that I was going to get a small refund back!

I received a total refund of $357 and combined with my tax savings, which are now “extra”, I had a small windfall of $1,831.

I’ll admit it, I was pretty stoked to find out about this extra money and it couldn’t have come at a better time as I’ve had a few additional house projects come up that need to be completed ASAP. Unfortunately, the projects will cost me more than just my tax refund money, but I’ve got a plan in place to help me avoid charging anything onto a credit card. I’ll tell you more about that later.

In the meantime, here is a little table showing how I’ve spent a portion of my tax refund already:

Accountant Fee$450.00
Car Expenses$78.71
House Project (so far)$291.93

2015 Tax Plan

Another thing I want to discuss today is my plan for 2015. After speaking with my accountant, I’m not required to pay quarterly taxes for my freelance income because I got a refund in 2014. But I know that I’ve already made more in the first 3 months of freelancing this year than I did in the entire year of 2014. Therefore, my accountant and I decided I should begin paying a little something into quarterly taxes to cover my bottom so I (hopefully) don’t owe at the end of the year.

This is my first time paying quarterly taxes and so I’ll update you as I learn more at the end of the year. I thought Femme Frugality did a great job of explaining more about her quarterly tax strategy in this post. She and I seem to have a similar opinion on paying quarterly taxes this year, so be sure to check that post out for more info.

Have you ever paid quarterly taxes? Why or why not?

*Part of Financially Savvy Saturdays on brokeGIRLrich, A Disease Called Debt and Shoeaholic No More*

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15 responses to “It’s Tax Day!

  1. I haven’t paid quarterly income taxes before, but I have had to make quarterly sales tax payments in the past, for my small business that I’m winding down this year. This is a good thing for someone like me, because I don’t have to remember to set aside the money and keep adding to it all year.

    1. I actually kind of like saving money for taxes all year as it gets me used to seeing a larger amount in my savings account, which will be helpful once the debts are gone and I go into aggressive savings mode!

    1. Ugh! That stinks. 🙁 I’m hoping my quarterly taxes this year will be enough to help me avoid owing more when I get my taxes done next year, but we’ll see I guess. Either way, paying some quarterly throughout the year this year will help me.

    1. It’s true, my accountant is quite expensive. But he is someone I trust and I’m just not sure if I’d be comfortable switching. I’ve gone to him my whole life and my dad’s gone there for like 20 years. Something to consider though!

    2. As someone that used to work for one of “those places” (not H&R, but a competitor), I can tell you that unless things have changed DRASTICALLY in recent years, they charge by the form. So, the more complicated your taxes are, the more forms you use, the higher your prep bill will be. $100 wasn’t the lowest fee I ever saw, but it was pretty close. Since my life has gotten significantly more complex than it used to be, I’d expect my fees to be somewhere in the $350-$500 range, when before I would’ve been one of those $100 returns.

      I’d say, since you trust your accountant, stick with him. That means a lot when it’s someone handling your finances. Plus, he’s probably better equipped to handle any audits that may ever come your way than a seasonal tax prep place anyway! And the fees are a business expense that you can write off on your 2015 taxes, no matter where you go. 😀

  2. Paying taxes might be a drag, but on the plus side your making more money so that always is a better option to have. I think 450 is fine if the accountant is providing very good services. Good luck in 2015.

  3. Our refund worked out the same way last year…a large chunk of it came from me saving what I didn’t have to pay! (Though I guess it did reduce my refund, so I paid it in some respect.) I think you’re being super smart, though, especially as it’s not just owing a large chunk of money at once, but owing all those nasty penalties for not paying as you go along, too. Thanks a ton for the mention!

  4. I have not had to pay quarterly taxes because I have a lovely rental home that has a loss every year and so far has offset any extra income I earn. That will hopefully change next year.

  5. Pleased you got a refund Kayla that’s great! I do my own taxes annually but I always dread doing them in case I make some kind of horrible mistake. I hardly ever pay much tax so it doesn’t seem worth paying for an accountant! But maybe I should to save the stress every year!

  6. Way to go, I wound up owing a couple of hundred dollars at tax time. It hasn’t worked out in favor of a refund in several years now :o/ C’est la vie.

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