Self-employed 1099 contractor: How much should I set aside for taxes weekly?

What about state taxes? Should those be included in that 30-35% estimate or is that just for federal?

Do they really need to save that much? I'm a 1099 worker too and I only save like 20% and I've been fine. Maybe I'm doing something wrong but I've never had issues.

The 30-35% estimate includes both federal and state taxes, though state tax rates vary significantly. If you're in a high-tax state like California or New York, you might want to set aside closer to 40%. In a state with no income tax like Texas or Florida, 30% should cover your federal obligations. Saving only 20% is likely insufficient unless you have substantial deductions or are in a lower income bracket. At $3200/week ($166,400 annually), you're in a higher tax bracket plus paying the full 15.3% self-employment tax. Many people underpay and end up with a shocking tax bill and potential penalties. Better to save too much than too little.

Does it actually work for calculating quarterly payments? I've been guessing and either paying too much or too little every quarter.

Sounds like another scam tax service. How do you know they're giving legitimate advice? I've been burned by "tax experts" before who nearly got me audited.

Yes, it specifically helps with calculating quarterly estimates based on your projected income and deductions. You can update your income information throughout the year if your earnings fluctuate, and it recalculates your quarterly payment amounts. I used to overpay in some quarters and underpay in others, but this has made it much more consistent. It's definitely legitimate - they don't give you sketchy "tricks" like some services. It's all based on proper tax law and regulations. They explain exactly which tax codes apply to your deductions and why. Everything is referenced to actual IRS publications. I've used it for two tax seasons now without any issues.

How does this even work? The IRS phone system is a nightmare, I can't imagine how anyone can skip the line. Seems too good to be true.

Yeah right. Nobody gets through to the IRS. This sounds like a complete scam to me. They probably just take your money and give you generic advice you could get anywhere.

It uses some kind of system that continuously redials and navigates the IRS phone tree until it finds an open line, then it calls you and connects you directly. I don't know the exact technology, but it works! They only charge you if you actually get connected to an agent. It's definitely not generic advice. You're talking to actual IRS representatives who have access to your tax records and can give you specific guidance based on your situation. That's why it was so valuable for me - I got answers that applied specifically to my contracting situation, not just general guidelines. I was super skeptical too but it really worked.

Thanks for mentioning this! I drive probably 300-400 miles a week between client sites. I had no idea the deduction was that high. Does the app you mentioned cost anything? Are there free alternatives that work well?

There's a free version of MileIQ that tracks up to 40 trips per month, which might not be enough for you based on how much you drive. The premium version is around $6/month. There are other free options like Stride or Everlance that also have free tiers with more trips. The key thing is to start tracking ASAP, even if you just use a paper log or spreadsheet at first. Make sure to record the date, starting mileage, ending mileage, total miles, and purpose of each business trip. The standard mileage rate is definitely worth it - it's designed to cover gas, wear and tear, depreciation, etc., which usually amounts to much more than just claiming gas expenses.

This is so important! I'm in California and didn't save enough for state taxes my first year as a 1099. Got hit with a massive bill I wasn't expecting.

This is really helpful advice about the high-yield savings accounts! I've been keeping my tax money in my regular checking account and earning basically nothing on it. 4.5% APY sounds amazing - that could be an extra few hundred dollars by the end of the year just from the money I'm required to set aside anyway. One question though - when tax time comes around, do you transfer the money back to your checking account to make the payments, or can you pay estimated taxes directly from the savings account? I've never made quarterly payments before so I'm not sure about the logistics of actually sending the money to the IRS.

You can actually pay your quarterly estimated taxes directly online through the IRS Direct Pay system or EFTPS (Electronic Federal Tax Payment System) using your savings account routing and account numbers. No need to transfer to checking first! I set up my payments through EFTPS - you just register once with your SSN and bank account info, then you can schedule payments in advance or make them on the spot. It pulls directly from whatever account you specify. Super convenient and you get confirmation emails for your records. For state taxes, most states have similar online payment systems. Just make sure to keep good records of when you made each payment and the confirmation numbers in case you need them later. The high-yield account really does add up - I earned about $400 last year just on my tax savings money sitting there!

You can actually pay your estimated taxes directly from most high-yield savings accounts! The IRS Electronic Federal Tax Payment System (EFTPS) allows you to link your savings account for direct debits. You just need the routing and account numbers. I've been doing this for two years now and it's super convenient - no need to transfer money back and forth. You can schedule your quarterly payments in advance on EFTPS, and they'll automatically deduct from your tax savings account on the due dates (January 15, April 15, June 15, and September 15). Just make sure your savings account allows ACH transfers for government payments. Most major banks like Marcus, Ally, and Capital One support this, but it's worth double-checking when you open the account. Some smaller credit unions might have restrictions on government ACH debits.

You can actually pay estimated taxes directly from most savings accounts! The IRS Electronic Federal Tax Payment System (EFTPS) lets you link your savings account and make payments directly without having to transfer money around. Just make sure your high-yield savings account allows ACH transfers (most do, but some online banks have restrictions). I usually make my quarterly payments online through EFTPS on the 15th of each quarter (January, April, June, September). You can also pay by phone or mail a check, but electronic is fastest and you get confirmation right away. Just keep track of your payment confirmations for your records. One tip - I actually keep a small buffer in my tax savings account (maybe an extra $200-300) because sometimes my income fluctuates and I want to make sure I never come up short on a quarterly payment. Better to have a little extra earning interest than to scramble to find money when payment time comes!

You can actually pay your estimated taxes directly from most savings accounts! The IRS accepts payments through their Electronic Federal Tax Payment System (EFTPS) which lets you link either checking or savings accounts. You can also use the IRS Direct Pay system on their website for individual payments. I usually just transfer the money to checking first out of habit, but you're right that paying directly from savings would save a step. Just make sure your savings account allows electronic withdrawals - some high-yield accounts limit the number of withdrawals per month, but tax payments shouldn't put you over those limits. The quarterly due dates are January 15, April 15, June 15, and September 15, so you'll want to set reminders. Missing a payment can result in penalties even if you end up getting a refund when you file your actual return.

You can actually pay your estimated taxes directly from most high-yield savings accounts! I pay mine online through the IRS Direct Pay system (irs.gov/payments) and just use my savings account routing and account numbers. No need to transfer to checking first. You can also set up automatic quarterly payments through EFTPS (Electronic Federal Tax Payment System) if you want to make it even more hands-off. Just be careful with the automatic payments - make sure you're calculating the right amounts each quarter, especially if your income fluctuates like Diego mentioned in the original post. The interest you earn on the tax savings is actually taxable income itself, so don't forget to account for that! But even after taxes on the interest, you're still coming out ahead compared to earning nothing in a regular checking account.

You can actually pay your estimated taxes directly from most savings accounts! The IRS accepts payments through their Electronic Federal Tax Payment System (EFTPS) which allows you to link your savings account directly. You can also pay online at irs.gov using Direct Pay, or even set up automatic quarterly withdrawals so you don't have to remember the due dates. I personally transfer the money to checking first just because I like to keep better track of my expenses, but paying directly from savings definitely works and saves you a step. Just make sure your savings account allows ACH transfers - most do, but it's worth double-checking with your bank. The quarterly due dates are usually January 15th, April 15th, June 15th, and September 15th for the following year's taxes. Setting up automatic payments has been a lifesaver for me since I used to always forget and end up scrambling at the last minute!

You can actually pay your estimated taxes directly from most savings accounts! The IRS accepts payments through their Electronic Federal Tax Payment System (EFTPS) and you can link either checking or savings accounts to it. You can also use their online payment portal at irs.gov/payments which accepts both account types. I usually just transfer the money to checking first since I'm more familiar with that process, but paying directly from savings definitely works and saves you a step. Just make sure you have enough in the account to cover the payment since some banks limit the number of withdrawals from savings accounts per month. The key thing is to make those quarterly payments by the deadlines (January 15, April 15, June 15, and September 15) to avoid underpayment penalties. Set calendar reminders now so you don't forget!

You can actually pay your estimated taxes directly from your savings account! The IRS allows electronic payments through their EFTPS (Electronic Federal Tax Payment System) or you can use their Direct Pay system on irs.gov. Both let you link your savings account routing and account numbers to make payments directly. I personally transfer the money to checking first just because I like having that extra step to review the payment amount before it goes out, but it's totally not necessary. The electronic payment systems are super convenient - you can even schedule your quarterly payments in advance once you know your amounts. Just make sure to save your confirmation numbers when you make the payments. The IRS systems will give you a confirmation that's good to keep with your tax records. And definitely double-check your account numbers when setting up the payment - a typo there can cause major headaches!

Great question about payment logistics! You have a few options for paying your quarterly estimated taxes. The easiest is probably using the IRS Direct Pay system online (irs.gov/payments/direct-pay) - you can pay directly from either your checking or savings account using your bank's routing and account numbers. I personally transfer the money to my checking account first just to keep things clean and make sure I have enough buffer for any fees, but technically you can pay directly from most savings accounts. Just check with your bank about any transaction limits - some savings accounts restrict the number of withdrawals per month. You can also mail in a check with Form 1040-ES, but online is much faster and you get immediate confirmation. The key dates for 2024 quarterly payments are: Jan 15, April 15, June 17, and Sept 16. Set calendar reminders now so you don't miss them! One tip: I always pay my estimated taxes a few days early to account for processing time and avoid any potential late fees. Better safe than sorry when dealing with the IRS.

You can actually pay your estimated taxes directly from most savings accounts! The IRS accepts payments through their Electronic Federal Tax Payment System (EFTPS) which lets you link your savings account directly. You just need your bank routing number and account number. Alternatively, you can use the IRS Direct Pay system on their website, or even pay by phone. Most high-yield savings accounts allow ACH transfers for tax payments without any issues - just make sure to check with your specific bank about any daily transfer limits since quarterly payments can be pretty substantial. I usually make my payments directly from the savings account to keep things simple and avoid the extra step of transferring to checking first. Plus it helps maintain that mental separation of "this money belongs to the IRS" right up until the moment it's actually sent to them!

You can actually pay your estimated taxes directly from most high-yield savings accounts! The IRS accepts electronic payments through their EFTPS (Electronic Federal Tax Payment System) website, and you can link your savings account directly to it. Most banks also allow you to set up bill pay to send checks to the IRS if you prefer that method. I personally use EFTPS because it's free, secure, and you get instant confirmation that your payment went through. You just need to register once with your SSN and bank account info, then you can schedule your quarterly payments in advance. Some people like to transfer the money to checking first just to keep everything organized, but it's definitely not required. Just make sure to pay attention to the quarterly due dates (January 15, April 15, June 15, and September 15) and give yourself a few days buffer in case there are any processing delays. The IRS can be pretty strict about late payment penalties even if you're just a day or two late.

You can actually pay your quarterly estimated taxes directly online through the IRS EFTPS system (Electronic Federal Tax Payment System) which can pull directly from your savings account. You'll need to set up an account with them using your SSN and bank routing/account info. Alternatively, you can use the IRS Direct Pay system for one-off payments, or even pay by phone. Most of these systems accept payments directly from savings accounts, so you don't need to transfer to checking first. Just make sure you have your account and routing numbers handy. The key dates to remember are January 15, April 15, June 15, and September 15 for your quarterly payments. Set calendar reminders now so you don't miss them and get hit with penalties!

You can actually pay your estimated taxes directly from most savings accounts! The IRS accepts payments through their online EFTPS (Electronic Federal Tax Payment System) which can pull directly from savings accounts, not just checking accounts. You just need your bank routing number and account number. I personally transfer the money to checking first just because I like to keep everything organized and it makes my record-keeping cleaner, but it's not required. Some people find it easier to pay directly from the tax savings account so there's no chance of accidentally spending the money between the transfer and the payment. Just make sure to keep good records of when you make the payments and how much, since you'll need those details when you file your annual return. The EFTPS system gives you confirmation numbers for each payment which is helpful for documentation.