Welcome J.K. Lasser Readers:
As self-employed filers, you don't have any paycheck from which income taxes can be withheld. You
can't wait until you file your return to pay your income and self-employment taxes; you'll need to cover
your tax bill through quarterly estimated tax payments.
Don't be one of the millions of self-employed individuals who owe penalties and get into trouble because
they can't follow estimated tax rules. IRS statistics show that less than 40% of self-employed taxpayers
are tax payment compliant, versus salaried employees, who are 98% compliant in the adequacy of the
amount of their mandatory withholding payments.
Consider using an online tool called Tax-Aside to put your estimated taxes on autopilot.
This self-withholding and payment system for non-W2 filers figures weekly set-asides, transfers funds from
your checking account into an interest-bearing FDIC-insured escrow account, and then makes your tax
payments on their due dates, while allowing you full control over your funds at all times.
The cost of using this tool can be less than the penalties you'd otherwise pay-and helps you establish good business practices so you can concentrate on running your business knowing your taxes are under control.
Why Tax-Aside?
Tax-Aside is a discrete, confidential, voluntary estimated tax savings plan and payment service, designed
to help
the self-employed who may find themselves remiss, because they are either: 1) not regimented, or,
2) not inclined to make sufficient quarterly estimated tax payments.
A businessperson who is delinquent in this area need not feel alone; in fact, they are in the vast majority.
IRS statistics show that less than 40% of self-employed taxpayers are tax payment compliant, versus salaried employees, who are 98% compliant in the adequacy of the amount of their mandatory withholding payments.
Tax-Aside will assist its self-employed and business owner Subscribers to become tax compliant, by means of an estimated tax escrow account.
Periodic (weekly, bi-weekly, or monthly) ACH debits, from the Subscriber’s checking or savings account, will be placed there. Along with set-aside reminders and activity statements, the cost for Tax-Aside for each user only $7.95 per month.
The following is a table based upon a single person, self-employed, using the standard deductions and setting aside tax payments on a weekly basis:
|
Income |
Tax |
Tax-Aside |
Add-backs1 |
Tax-Aside |
IRS |
Savings2 |
$30,000 |
6,717 |
96 |
38 |
58 |
306 |
248 |
$50,000 |
12,990 |
96 |
49 |
47 |
588 |
541 |
$100,000 |
31,810 |
96 |
85 |
11 |
1488 |
1,477 |
1 Includes projected interest earned on escrow funds (net of tax) plus a deduction for Tax-Aside fees paid.
2 Equals annual fees for weekly set asides, less IRS penalty plus add-backs.
From this table, we can assume that the cost of using Tax-Aside will actually be a savings, when compared to
the penalties incurred by any self-employed earner, declaring $17,000 or more, who missed his/her quarterly estimated tax payments.
The Hidden Costs of Non-Compliance
In addition to financial consequences, there are also quality-of-life considerations worth mentioning, concerning the plight of the self-employed individual who does not remit timely tax payments;
the following generally occurs:
- The inability to lease a car, buy a house, or obtain a credit card, due to impaired credit, is an
extension of this dilemma. - The IRS files tax liens and the individual’s credit, reputation and peace of mind are impaired.
- The individual can’t maintain a bank account due to fear of an IRS levy.
- The filing of separate tax returns to keep the spouse’s credit clean, results in the
unnecessary payment of thousands of dollars in extra taxes due to the bracket break
between MFS and MFJ. - Another more serious consequence of the above scenario occurs as a snowball effect, when
a delinquent taxpayer stops filing tax returns and becomes liable for additional civil and
criminal penalties.
In summary, Tax-Aside pricing is less costly than a standard payroll service (generally seven dollars
per transaction) and helps self-employed earners to save money and stay in, or get back into tax compliance.
| New Tax-Aside feature... | make a one time catch up payment now! |
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