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Comment by simmons | Hacker News Reader

My situation is very similar to yours. For annual filings, I just use TurboTax Self-Employed (online). I'm not necessarily endorsing it. I haven't tried other solutions out of a fear that I would miss out on potential reduction of friction from the tool not having the context of previous years' returns.

For quarterly taxes, I use my own spreadsheets, including one that implements the annualized income installment method from Publication 505. (I can't fathom how some freelancers can have income so consistent and/or a crystal ball revealing their total year income that use of simpler methods is possible.)

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I do the same in April, but skip quarterly tax entirely.

The fine is only a hundred dollars or so, and TurboTax will calculate it for you and include it. For the hassle it saves, and in the context of a 5 figure tax bill, it's a pretty simple choice not to bother with it.

If you take the previous year's tax and pay that as your estimated tax (split into quarters) you avoid any penalty. Only issue is if your income drops significantly from one year to the next but you can always calculate your taxes in January and reduce your final quarterly payment in that case.

Interesting re: skipping quarterly taxes and taking the hit on the small penalty. I wonder if it would raise suspicion if you just stop paying estimates and pay up in April.

FWIW, Ally bank has a 3% savings account atm, so you could easily make up that penalty by parking your future tax payments in a high yield savings.

Couple states I've lived in, missed payment penalties are 10% of what was owed. Parking, say, $3k at 3% for a few months to net ... $100 to then pay a $300 fine doesn't seem to make much sense.

I've missed payments, and paid the fines, and typically it's a small % of the total tax burden, so it's not hit me hard, but I wouldn't plan to explicitly withhold payments to try to pick up small % in savings.

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