Our state tax is 6%. Is that what I hold asside from every paying job to help me not have to pay out of pocket at the end of the year?

Im pretty savvy with everything business but I must admit the whole tax things throws me.

I want to put money aside in a special account for taxes.

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Michelle of LostInOfficeSpace.com

I usually set aside 25 to 30% of each pay for taxes. That covers local, state, and federal taxes, and gives a bit leftover at the end of the year in my savings account.

I do this because you never know what changes are going to be made in the tax code throughout the year. They might raise taxes, lower taxes, or any number of things that could end up leaving you short at the end of the year, and having to pay out.

I pay my taxes to state and federal quarterly, and my city taxes yearly.

Thanks a bunch! VERY helpful. I totally forgot about Federal.

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Michelle of LostInOfficeSpace.com

I haven't always been good about it, but we should be setting aside at least 15.3% for federal/self employment taxes (along with our state taxes) - but this was the LAST quarter I'm managing taxes the month they're due - our tax bills are just far too expensive anymore to manage without planning ahead.

In 2009 I'm going to be putting 30% monthly aside as well.

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I find that 30% tends to be more than enough. Taxes are not something you want to come up short on, and if you have a dedicated savings account for the money that you set aside for taxes, you earn interest on it before you make that quarterly payment. It's always better to be safe than sorry, especially in the realm of taxes!

I totally agree
I wrote our quarterly check last night - ouch!

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Thanks guys. Im going to put it in an interest-earning account with every job. count it as a "loss" in my pay but I know I will be thankful at the end of the year.

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Michelle of LostInOfficeSpace.com