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Saving for retirement

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Saving for Retirement in a Gig Economy

Evan Cooper Sep 08, 2016


September 15th is just around the corner.

For those who are self-employed in any way, shape or form – an ever-expanding number given the replacement of many full- and part-time employees with independent contractors – the middle of September, along with the 15th of January, April and June, are important dates. They are the deadlines for remitting estimated taxes to the government.

Crazy Quarters

You’d think since remittances are based on quarterly earnings, you’d be required to send them in January (for the previous year’s fourth quarter) and then in April, July and October. That would be logical, but that’s not how the government works. For IRS remittance purposes, some quarters are four months long, while others are two months long. The reasoning of that beats me.

Anyway, I don’t plan to talk about the IRS’ calendar quirks or discuss how difficult it is to figure out what you actually have to send the government. While they give you worksheets to estimate the percentage of income you should remit to cover income tax plus the full burden of the 12.4% Social Security tax as well as the 2.9% Medicare tax on the first $118,500 of income, there is little recognition on the government’s part that your income is likely to vary throughout the year or that you may be filing jointly with a spouse who is employed and has taxes withheld. If you get it wrong and send the government too little, they penalize you with – what I believe – are excessive fees.

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