TIL I've been doing my quarterly taxes wrong for two years

I was putting together my stuff for my tax guy, and I saw a note from him on last year's return. It said my estimated payments were about $800 short. I just figured I'd messed up the math once. But then I looked at my bank statements from the last eight quarters. EVERY single time, I'd sent the IRS 25% of my profit. Sounds right, right? Nope. I forgot that as a sole proprietor, I'm also paying the employer half of my Social Security and Medicare. That's another 7.65% on top. The moment it clicked was seeing my total tax owed for 2023 versus what I'd actually paid. I felt so stupid. I've basically been giving myself a surprise bill every April. How do you guys figure out the right amount to send so you don't get hit with a penalty?

4 comments

4 Comments

hannah_fisher582mo ago

Brutal lesson to learn. I just use last year's total tax bill divided by four now.

derekhunt2mo ago

You sent only 25% for eight straight quarters? That's brutal!

troychen2mo ago

Tell me about it (we had the same thing happen last year). Watching those numbers stay flat for so long is just painful. Really makes you question everything.

amyh1229d ago

The flat numbers are a trap cause they make you think you're fine when really the IRS is just quietly racking up interest on the back end. That silent compounding is what really gets you.