Question

Long post New here- first post!  Taxes - owing $ My husband now makes about 90k he’s self employed no savings - no retirement- no insurance so we are starting to be much smarter- had a ROTH IRA I cancelled cause didn’t fully understand it. We do have life ins tho. Taxes are our biggest downfall - so when we first got married I didn’t know he had to pay in- he thought it wouldn’t be a lot (he was new to it) it was maybe 10k I’m paying 2016 2017 (took out loan paid most of what we owed) 2018 all back - total is like 30k I think? Need to get exact number. What really sucks is we can’t get ahead- like I’m struggling to get what I need by April because they draft 500$ a month IRS- 200$ month to state. It’s super hard for me to pull out for the current year and pay back 700 each month. We are paying off all our credit cards and done with them we have maybe 3? Capital one - 300$- husbands card Kohl’s- 900 SECU CC- 7000- maxed out Any advice on the taxes? I don’t fully understand the interest at all - he makes to much to qualify for any help so they say (IRS) I’m a stay at home mom. And as far as the cards would u pay them all off before starting any sinking funds? We would be doing GREAT if not for backpay taxes I’m in NC & we pay monthly almost our mortgage (850$) Any help is appreciated- but go easy on me  

Answer 1

Ugh following because I’m married to someone self employed and the taxes kill us too

Comments

@typeface my husband’s self employed, and it’s great. Are you taking all the self employed business deductions? “Office supplies” vary by your husband’s job but among some of the things you can deduct for taxes are: phone bills, internet, disability insurance, monthly health insurance premiums, clothes if it’s specific to your job. Computers, phones, etc gets deducted under office supplies. Etc.  

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@soutane every single one.  

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@typeface oh man ☹️

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@zugzwang I’m not sure what’s going on either. ‍♀️ but you should talk to a certified cpa and see what you’re allowed to take as deductions . I don’t think your husbands taking advantage of being self employed.  

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Also I know it feels impossible saving enough for current taxes while trying to pay for back taxes.  and the interest for back taxes is crazy, so it builds up. My parents were like it’s 2017 and we’re paying for back taxes starting from 2013.  what they did was you have to have enough money saved to pay your current year’s taxes (since it sounds like you’re not making quarterly payments) Make that wall, and then as you make back taxes hopefully it reaches that wall. Basically you’re closing that gap. If the ending finishing line keeps moving basically there’s no finish line and it’s ongoing. ☹️ I know it’s hard, but little changes will add up. Maybe for a few years you’ll have to buckle down and really go for it.  

Answer 2

You guys should be taking out a minimum of 25% of every paycheck and putting into into a high yield savings account for taxes. That’s the first rule of being self employed. I put 30% away and pay quarterly and have no issues. Yes it sucks but I don’t even let that 30% exist just like it wouldn’t if I worked for someone else who took taxes out.  

Comments

I’m confused on the loan part. You took out a loan to pay the back taxes and are now trying to pay off that loan? What is the interest rate that you are paying that much into it?  

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@eventful77661 I agree, we always set aside 25 to 30 percent for quarterly taxes. Dave Ramsey says to stop snowballing your other debts and go all out on IRS payments first.  

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@eventful77661 what is an example of high yield savings accounts in US? Most have low interest rates.  

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They are pretty low right now and other options for sure exist but I was just saying setting it aside would be the best bet. I have to pay quarterly so a lot of long term options don’t work for us.  

Answer 3

Higher a tax accountant to help you plan so you can get ahead & to ensure you’re doing everything you can to pay as little in taxes as possible. Well worth the $$

Answer 4

You need to either be paying estimated federal taxes every quarter or you need to be sticking $ into a savings account specifically for your taxes. I would DEFINITELY suggest getting an accountant to help you so you know what you need to be paying. We pay $5k MONTHLY to the state and then typically owe $30k federally. You just have to prepare for it.  

Answer 5

You need to be able to live on $60, 000 per year. Don’t even consider the 25-30% you take off the top for taxes before you start the budgeting process.  

Answer 6

I’m also self employed and I always set 25% of all my income into a savings account for taxes. As soon as my check clears, I transfer it. You should be living off of 75, 000 not 100, 000 (approximately) to account for taxes that would be taken out by an employer.  

Comments

Also, ally bank has a nice interest rate on savings accounts. It’s an online bank.