(…or, Wage Withholding vs. Estimated Taxes)
Are you in your first year or two in business, and wonder why the hell you owe so much tax when you’re not making that much?
That’s a problem, isn’t it?
I know, and I’m going to share my thoughts on this.
Stay with us here…
Let us say that you are what I half-jokingly call a Middle American.
Not rich, but not living under the bridge, either.
You have a good work ethic.
You aren’t looking for a handout.
Chances are, most or practically all of you reading this are good at what you do.
Now, who you’re creating that value for has a lot to do with the kind of taxpayer you are.
If you’re working for a paycheck to support a small, or large, company you’re creating value directly for their customers…
…and also indirectly for them.
For you, tax life is easy.
It just comes out of your check.
Hopefully you’re hitting my idealized “bullseye” of zero to a $500 refund from the IRS when you file every year, but more on that later.
Let’s now turn our attention to what I think of as my main audience now.
That’s French for “to enter in and take,” by the way.
That’s almost anyone that has read up this point, I imagine, considering who I work and write for.
The small business person.
You got your business cards and your trade-specific tools and equipment.
You’ve possibly even purchased training and education.
Ordered business cards. Cranked up a Facebook business page.
You’ve been doing your thing for a year or two, and you’re noticing an ugly reality.
You’re getting your ass kicked by taxes, to put it in laymen’s terms.
Chances are, without outside guidance or good advice from a colleague…
…it’s landing on you like a cartoon safe on a crane from a high-rise window in March or April.
Because let’s face it, they don’t teach this in high school the way they should.
You’re paying twice as much Social Security and Medicare as you used to when you were earning a nice convenient paycheck.
It’s pissing you off.
First of all, it should.
But, you are not unique, or being picked on or singled out.
You just need a little help to understand what this travesty of government IS, for God’s sake!
Here’s the dichotomy: if you work for “the man” your taxes don’t take much effort.
If you work for yourself you have to spend a little more time on it, simply put.
We help with this, with varying levels of service provisions, but I’m going to give you a quick freebie here…
Quick and dirty estimated tax payment method: take the Total Tax line amount from your most recent tax filing.
Divide that by four, then round it to a whole number.
Go to IRS Direct Pay this year on April 15, June 15, September 15, and January 15, 2022.
And pay that amount.
You can get your “bullseye target” in the sweet spot, and avoid underpayment penalties too!
Now! If you need more help because your business fluctuates seasonally…
…or, you just hate all the bookkeeping and tax crap, and want to focus on what you do well…
Help is available!
Even during tax season we are always eager to help.
Wherever you’re reading this, there’s a link to schedule a free call.
Have an awesome 2021, whoever you are or whatever you do!