Contract workers (USA): how do you calculate how many $$ to put away for taxes?

by vkuruthers on 7/17/2018, 3:05:52 PM with 5 comments
For people doing contract work in the USA who are working on a corp to corp basis, how are you calculating how many $$$ per month to put away for taxes for next tax season, and what is your preferred way of "parking" that $$$ so it earns some good interest?

  • by Finnucane on 7/17/2018, 3:41:53 PM

    When I was freelancing I'd put a third of every client payment in a separate savings account. Wasn't really a sophisticated calculation, just making sure the money was set aside. As pointed out below, the need to make payments out of that account limits you to liquid cash accounts. Putting that money into a risky account to get a little extra interest seems like asking for trouble in the long term.

  • by beauzero on 7/17/2018, 3:27:31 PM

    You can't really "park" it because you are supposed to file taxes every quarter. I do between 50% and 33% depending upon the needs at home. NEVER less than 33%. It used to be 40% but with the Trump tax law changes now we go as shallow as 33%. We bill once a month.