If you’ve just started freelancing, congratulations! It’s a bold move, to take the leap from full-time employee to self-employed. With all the hats you'll be wearing as a freelancer, sometimes setting aside money for taxes may get backlogged. In any case, It’s important to understand tax payments when self-employed. Especially If you find yourself Googling “making my tax payments”. Here is a quick guide on how to make quarterly tax payments as a freelancer.
Previously as a full-time employee, your employer would automatically tax a percentage of your paycheck and pay those taxes directly to the IRS. You only had to file an annual tax return once a year and then you'd be done. As a freelancer, it’s different. Payments from clients and various other income streams don’t have taxes taken out. Since taxes aren't taken out you could find yourself out of pocket when it's time to pay the IRS. Also, it can get a bit more tricky because you're also responsible for state and federal taxes, depending on the city and state you live in.
“Is there any positive news to all this?” we may be asking. Yes, in fact, there is (sigh of relief). Freelancers who keep track of all their business expenses can claim those back and pay less tax.
Saving for quarterly tax payments can be really straightforward. Simply spend a few minutes setting up automation for a designated percentage from each payment you receive, and when the money comes into your bank account, Catch will automatically put it into a Tax Goal.
The even better news? Catch can help estimate your tax requirements based on where you live and your income bracket, so you don’t have to do the research yourself.
When it comes time for your quarterly tax payments, all of your records are tracked in-app, *and* Catch will automatically send it off to the IRS for you. Sounds easy, right?