Wait, what are estimated taxes and do I actually have to pay them?

Ralph
00:00:00

Have you ever opened a letter from the IRS and felt your stomach drop? Or maybe you've been blindsided by a penalty for taxes you didn't even realize you owed? It's one of those moments where you feel like you're drowning in confusion, frustration, and even shame. What did you do wrong? If this sounds familiar, you're not alone. Today, we're going to tackle one of the most misunderstood aspects of taxes. Estimated taxes.

We're going to talk about what are they, who has to pay them, and most importantly, how do you avoid those nasty penalties? By the end of this episode, you'll have a clear understanding of what estimated taxes are and if you're required to pay them, how to set yourself up for success without stress. The question we're answering today is "Wait, what are estimated taxes, and do I actually have to pay them?"

Podcast Announcer
00:00:48

In a world where crushing debt keeps you trapped, where living paycheck to paycheck has become your new normal, and where the dream of retirement seems impossibly out of reach, there's hope. Join financial evangelist Ralph Estep Jr. A man who's walked through the fire of financial failure and emerged stronger on the other side.

Welcome to Ask Ralph, the show where real world experience meets biblical truth to break the bondage of financial despair.

Get ready to take control of your money, break free from the financial stress and align your resources with God's purpose for your life. This is Ask Ralph with Ralph Estep Jr.

Ralph
00:01:28

Well, welcome back to the Ask Ralph show where we're on a mission to help you master your finances from a Christian perspective. Every episode, we dive into a question from a listener just like you, someone who's seeking financial freedom while growing in their faith. Now, before we get started, let's reflect on yesterday's episode.

We talk about how much money you could save by managing your credit like a pro. So if you missed it, I strongly encourage you to check it out. You'll be surprised how small tweaks to your credit habits can save you hundreds, even thousands of dollars over time. As always, you can find that episode wherever you're listening. Just go to askralph.com.
All right. Well, let's jump into today's question. This one comes from Beth, a small business owner. And Beth writes this. .

"Hi Ralph, I've been running my own business for the past couple of years, and I feel like taxes are always a nightmare for me. I'll be honest. I didn't even know how estimated taxes were a thing until I got hit with penalties last year. I feel so defeated. I'm trying to do everything right, but it's overwhelming,

and I don't even know where to start. I hate feeling like I'm failing at something so important. How do you figure this out without drowning in confusion?"

Beth, first of all, thank you for your honesty. I can hear the frustration in your words, and I know how overwhelming taxes, especially estimated taxes can feel. And let me tell you, you're not alone in this. I've worked with countless people in your shoes, small business owners, freelancers individuals with side hustles who have all felt the same way you do, Beth.

They feel blindsided by the complexity of it all, but here's the good news. There is hope. And I'm going to give you direction today. You don't have to feel defeated. You don't have to feel overwhelmed. I've got answers for you today, because today we're going to break this down into a way that makes sense.

I'm going to put it in simple terms with, a lot of my clients say, Ralph breaks it down in simple English. And I'm going to share some practical steps to help you get back on track.
Now, before we get into the nitty gritty of estimated taxes, let's take a moment to anchor ourselves in God's word. When I think about taxes or any financial responsibility, I'm reminded of Matthew chapter 22 verse 21. And Jesus says this. And this is often quoted scripture about taxes. "So give back to Caesar

what is Caesar's, and to God what is God's." And think about this verse is so powerful because it reminds us of two things. First thing. As Christians, we have a responsibility to fulfill our earthly obligations. One of those is paying taxes. That's just something we have a responsibility to do. And secondly, and probably most importantly, our ultimate allegiance is to God, which is exactly what the Bible verse is saying.

Jesus said, give to Caesar what is Caesar's. That's your money, that's your taxes and give to God what is God's.

Now when we approach something like taxes with this mindset, it shifts our perspective. And instead of seeing it as a burden, we can view it as an opportunity to be what I talk about on the show all the time and that's to be good stewards of what God has entrusted to us.

Well today, I'm grateful for this clarity and the peace that comes from God's word. Even in something as mundane as taxes, He gives us wisdom and he gives us guidance to help us navigate our responsibilities with confidence and integrity.

Now Beth, let's talk about why estimated taxes are so important, not just for you, but for anyone who's running their own business or earning income outside of that W2 job, because here's the thing. When you don't pay your taxes on time, the IRS charges you penalties and interest on what you owe. That's not a fun place to be. But it's not just about avoiding taxes. A lot of people think, well, it's just, I don't want to pay taxes.

I don't want to pay estimated taxes. Well, here's the thing. Estimated taxes are really about cashflow management. And maybe you ask me, why do you say that? Well, here's the deal. When you stay on top of your tax payments, and I have a lot of clients I've convinced to do this over the years. You're not scrambling at the end of the year to come up with a big lump sum.

In fact, I just had all of my year end meetings back in December. And with a lot of clients, we had a discussion that went like this. Hey, Ralph. How much am I going to owe? And we worked it out to the best of her, you know, see where things are and all that kind of thing. And they'll say, oh, you know, you're going to owe about $10,000. Well, several of my clients said, Ralph, that's great.

Let me go ahead and make that final payment. So I don't have that huge responsibility here at the end. So, if you're doing it correctly, you're spreading that responsibility out over the entire year. And trust me. That makes it more manageable and helped keep you in control. Now I have some clients that don't want to pay estimated taxes at all.

That's fine. And I'll talk about why that's probably not a great plan because they're going to get with the penalties. They could get it with interest. But let's not forget. Staying compliant with the IRS means there's less stress for you. You don't want to deal with issues with the IRS. And it gives you more confidence in your ability to run your business successfully. So Beth, let me share a story with you about a client of mine.

We'll just call him Mike. Now Mike was a freelance graphic designer. He loved his work, but he dreaded tax season. And let me just tell you, this dude had a knack for freelance graphic design. The sum of the stuff he made was beautiful. I don't have that level of creativity. I don't have that knack for that. But when it comes to taxes, that was not his thing.

And every year he said to me, it's like a bombshell. Because he wasn't setting aside money for taxes. And when the IRS bill came due, he would come in and get his taxes done. And he would sit down with me and he'd say, Ralph, okay, what's the damage? And I would say to him, I said, you know, Mike, I told you. There's a couple of things.

You could do a mounting going to go into like the whole idea of setting up a corporation to save money. That's a topic for another show. But I said, I told you all along to be setting aside money. Ah, yeah. Ralph, I never got to it. You know, always something came up. I had this bill with the kids.

I did this repair at to house. So every year and tax season he was scrambling. And because he was scrambling, we would do his tax return. He wouldn't have all the money to make the payment. So he was going to get hit with penalties and interest, and there wasn't a whole lot I could do because he wasn't doing what he needed to do. And he said something that stuck with me. Every year, he said, this will get done.

The tax appointment. I tell him what he owes. He says, Ralph, I just feel like I'm failing.
Well Beth, maybe you can relate with that, but here's the truth. Mike wasn't failing. He just didn't have the information or tools he needed to succeed. So once I really sat down,

I had a heart to heart with Mike. I think he finally understood what estimated taxes were and he was able to take action. So in Mike's case, here's what we did. I got tired of every year, him coming in and saying Ralph, I don't understand why I owe so much. I created a simple system for him. And I said, here's what I want you to do. Every time you get paid, cause he basically did jobs. You know, he had this project and that project, he would create, you know, a particular project for a company or for an individual. I say, here's what I want you to do, Mike. Real simple process. I want you to take, as soon as you get that payment, take 25% of it and put it into a separate savings account. And we're going to call that savings account taxes. I said, I want you to go to your bank. I want you to create another checking account or savings account, whatever you want to call it and just call it my tax account. And every time you get paid, I want you to put 25% in that. Second step.

We set up calendar reminders. I said to him here, give me your phone. I remember the first time we did this, I said, give me your iPhone.

Just like I've got, I said, here's what we're going to do. We're going right now in your iPhone. And we're going to set up 4 calendar events. We're going to set up one for April 15th. We're going to set up one for June 15th. We're going to set up one for September 15th. And we're going to set up one for January 15th.

I don't want you to forget. Those are the days that I want you to take that 25%. I showed him how to break it into the pieces between federal and state. Cause he's a Delaware guy. So he's got to pay federal and state taxes. I said, but here's the thing. When this pops up on your phone, that's the day that you're going to log into irs.gov and you're going to log into the State of Delaware website and you're going to pay those estimated taxes because here's the deal.

We automated it. And that's the key to this thing. If you want to be successful with estimated taxes, and again, there are other things to do, but we automated it for him. So every time he got paid, he had in his mind, he says, okay, I've got to do what Ralph told me to do. Let me put 25% automatically into that savings account. And see then the next year, by the end of that year, Mike not only had enough to cover his taxes. And I remember him coming in that next tax season. And he says, Ralph, I did exactly what you said.

I made all those quarterly payments. I can't wait to see what it looks like. And I did his taxes and I knew the numbers and he was actually getting a small refund. But I didn't tell him that at first I said, Hey, here's the good news, Mike, there is no penalties issue. There's no underpayment penalty at all. And I said, here's a surprise.

You weren't expecting. You're actually getting a small refund. And he said, he said, Ralph, I don't believe it. I can't believe what happened. I said, yeah, because you had an automated system and you did what you needed to do throughout the year. Now he took that refund he was doing, he just rolled it forward into next year's audit estimated tax and he said, Ralph, I'm going to have a better year this year. And he told me something later, he said, Ralph, that system gave me peace of mind and made me feel like I was finally in control of my finances. And I said, you know, I think about it.

How many years it took for him to get to that point. But see Beth, I want you to experience that same transformation that Mike did. I want you to feel confident about this. I don't want you to feel like it's a burden. I don't want you to be afraid of taxes. There's no reason to be. So here's how you can get started, Beth.

Here's what I'm gonna encourage you to do. Estimate your income for the year. Just say, Ralph, here's what I think my income going to be for the year. Now, a lot of people take last year's taxes. You can use that as a starting point. When I work with tax clients or business clients, one of the things that when we talk about estimated taxes, we do a look back and say, you know, for Mike, for example, I would say to Mike, okay, last year, you did this much in sales. What do you think your sales are going to be?

Well, Ralph, I think this year I'm going to do a little bit more than that. Fantastic. Let's add 20% of that. And how about expenses? Are you planning any big expenditures? No, I really got things down to a sign. So I expect that I'm just going to have higher income. So that's going to be our starting point. We know what to expect, and we're going to estimate our taxes based on that income for the prior year and then whatever additions we're going to have for this year. Second thing. Just like I did with Mike. Set up that separate savings account. Label it taxes. And listen, here's the thing. What goes into that savings account, the only time it comes out is if you're sending in quarterly estimated tax payments or you're sending in what you owe at year-end. And then I'm going to encourage you now, Michael, I think was a little light at 25%. I tell clients now to put between 25 and 30% of every payment they receive into that account.

Now, if you've got the type of income where it's continuous, like maybe you're a freelance contract or something like that. So you know you're going to get a certain amount each week. Then you don't have to worry about taking a 25 or 30%, just a set it and forget it. And then just like I did with Mike, mark your calendar, go on to your calendar program where they use an iPhone or Android, whatever technical thing.

Maybe you're one of these old school people that has the handwritten calendar. What I want you to do is write down those dates. And they're not actually on the quarter, which is a little bit confusing to people. But write these dates down, put them in your calendar. April 15th. June 15th, September 15th and January 15th.

And those are non-negotiable. I'm gonna encourage you to do it a few days before so you get the money in by that date. But put those on your calendar and make them a non-negotiable agreement that you make with yourself to make sure you're putting that money aside for taxes. Now another thing you can do is the IRS has got some great tools on their website.
They provide something called an estimated tax worksheet which can help you calculate your payments. Now again, you can also work with somebody like me. I'll talk to you a little bit later in this show how you get in touch with me. You can just go to askralph.com and click on book a call with Ralph, and I can help you put together a plan. But use those tools, use those things I talked about. Again, number one, you're going to estimate your income for the year.

Second thing, set up that separate savings account. And like I said, label it taxes, put 25 to 30%. Mark your calendar and then make sure you're updating that as you go, because maybe you've had a really good year and now all of a sudden you're worried about, Hey, this is really going to take off.

You want to make sure that you're in a safe place and you don't owe taxes. The key is to start small. I'm not asking you to do anything enormous. Just start small and build a habit because once you've got a system in place, And this is true in most things. You're going to feel less overwhelmed.

You're going to feel more confident and you're going to be able to manage your taxes effectively. And that's really what you've asked today. That's exactly what you're trying to accomplish.

Let me talk to you for a minute about something I see every day in my accounting practice. You know that feeling when you're staring at tax forms, and your stomach's in knots, this is stuff you don't do on an everyday basis. Maybe you're like Mike, you're a freelance graphic designer or you do something else.

You just don't understand taxes and guess what? You don't have to. You know, maybe you're worried about missing deductions, or maybe you caught little blurbs on the news or on one of these social media things you heard about new tax laws but you're not sure how they affect you, or maybe you don't even understand what we just covered today.

You don't understand the estimated tax process. You're saying to me, Ralph, I don't even know where to start. But that's exactly why I founded Saggio Management Group. That's my accounting practice. And here we don't just file your taxes because that's the easy part. We build a strategic plan to legally minimize what you owe because you have a right to pay your fair share and to make that as small as possible. So I'm going to encourage you today. Reach out and schedule a book a call with me.

You do that by going to askralphpodcast.com/taxprep. That'll put you right onto my schedule and it doesn't matter where you are. I work with clients all over the United States doing taxes. I have clients in Dallas, Texas. I got clients in Northern California, got clients in New York. I got clients in Florida.

You get the idea. Wherever you are. With the use of technology now with Zoom, the truth is it's like you're sitting right in front of me. So don't wait until you're stressed about deadlines, or maybe you're worried about you got that audit notice. Let's make sure you never pay more than your fair share in taxes.

Again, I encourage you go to askralphpodcast.com/taxprep. And let's do your taxes together.
Well, let's start with our reflection questions today. I always like to end the show with some reflection question. We can kind of digest what we talked about. So let's start with the first one.

Number one. Are you setting aside enough money from your income to cover your tax obligations? Or are you in that cycle where Mike was. That constant state of I'm dreading going to get my taxes done because I know they're going to tell me I owe and I haven't set aside the money. So ask yourself that difficult question. Are you setting aside enough money from your income to cover your tax obligations? Second question. That's what I work with.

And Mike and I encourage you to do the same thing, but do you have a system in place to track your income and expenses accurately? You noticed when I asked, started the questions, I said, okay, what was your income? What were your expenses? Well guess what, if you don't have a system in place to do that, you're going to be even farther in that hole.
You're going to be digging out from that. And that's the thing you want to develop a plan ahead. And that's my third reflection question today is how can planning ahead with your taxes help you honor God and reduce financial stress because that's the key to this. You want to have peace of mind.

You want to know that these taxes are a by-product of the work you're doing every day for a couple of reasons. Number one thing. You want to know how your business is doing. If you don't have a system in place that shows how much income you have, shows what your expenses are, how do you make good decisions?

One of the things that I do with all of my, what we call our monthly clients here is we work with them every month. We connect their bank accounts. We do all of those things. Even with our individual clients, I show them how to keep track of their taxes throughout the year. So they don't have these big surprise things at the end of the year. It is so critical that you have a plan in place.

So again, Three reflection questions. Are you setting aside enough money from your income to cover your taxes? Have you built that system to track income and expenses and also, you know, get ready for those estimated taxes, and how are you planning ahead? Because listen. Doing your taxes is great. That keeps you out of trouble with the IRS and keeps you in compliance. But the true value, it sounds like a hardware store, but the true value is in tax planning. It's one of the things I stress to my clients every day. Let's sit down and plan because if you have a plan, you're going to be able to honor God, you're going to be able to reduce your taxes and best of all, you're going to reduce your stress, which is going to give you peace of mind.

Well Beth, I hope this gave you the clarity and confidence you need to tackle estimated taxes. Remember. You're not failing. Listen to me. You're not failing Beth. Just like I said, Mike. You're learning. Well, tomorrow's episode will be all about tax relief. It's like tax week here, but it's tax season. It makes sense. So tomorrow we're going to talk about tax relief, specifically why some solutions, you know, these knuckleheads on TV and in print advertisement and all over social media saying, Hey, we can settle your taxes for pennies on the dollar. I'm going to share tomorrow, why some solutions are actually worse than the problem itself. It's going to be a real eye-opener.

So make sure you tune in. Now, remember as I close. My passion is to help you achieve financial success. I want to see you live out your dreams, and I want to see you grow in your faith. I want to see you pay as little taxes as possible, but I also don't want you to be stressed about it all year long. And you know this, as I always close the show, together we can master your finances from a Christian perspective.

So as I always end the show, stay financially savvy, and God bless you.


















































Welcome back to the Ask Ralph show, where we're on a mission to help you master your finances from a Christian perspective. Every episode, we dive into a question from a listener just like you, someone who's seeking financial freedom while growing in their faith.

Now, before we get started, let's reflect on yesterday's episode. We talked about how much money you could save by managing your credit like a pro. So if you missed it, I strongly encourage you to check it out.

You'd be surprised how small tweaks to your credit habits can save you hundreds, even thousands of dollars over time. As always, you can find that episode wherever you're listening. Just go to askraft.com all right, well, let's jump into today's question.

This one comes from Beth, a small business owner, and Beth writes this. Hi, Ralph. I've been running my own business for the past couple of years, and I feel like taxes are always a nightmare for me.

I'll be honest, I didn't even know how estimated taxes were a thing until I got hit with penalties last year. I feel so defeated. I'M trying to do everything right, but it's overwhelming and I don't even know where to start.

I hate feeling like I'm failing at something so important. How do you figure this out without drowning in confusion? Beth, first of all, thank you for your honesty.

I can hear the frustration in your words, and I know how overwhelming taxes, especially estimated taxes, can feel. And let me tell you, you're not alone in this. I've worked with countless people in your shoes.

Small business owners, freelancers, individuals with side hustles who have all felt the same way you do, Beth. They feel blindsided by the complexity of it all. But here's the good news. There is hope and I'm going to give you direction today.

You don't have to feel defeated. You don't have to feel overwhelmed. I've got answers for you today. Because today we're going to break this down into a way that makes sense.

I'm going to put it in simple terms with a lot of my clients, say Ralph breaks it down in simple English, and I'm going to share some practical steps to help you get back on track. Now, before we get into the nitty gritty of estimated taxes, let's take a moment to anchor ourselves in God's Word.

When I think about taxes or any financial responsibility, I'm reminded of Matthew chapter 22, verse 21. And Jesus says this, and this is often quoted scripture about taxes. So give back to Caesar what is Caesar's and to God what is God's.

And think about this verse is so powerful because it reminds us of two things. First thing, as Christians, we have a responsibility to fulfill our earthly obligations. One of those is paying taxes.

That's just something we have a responsibility to do. And secondly, and probably most importantly, our ultimate allegiance is to God, which is exactly what the the Bible verse is saying.

Jesus said, give to Caesar what is Caesar's that's your money, that's your taxes, and give to God what is God. Now when we approach something like taxes with this mindset, it shifts our perspective.

And instead of seeing it as a burden, we can view it as an opportunity to be what I talk about on this show all the time. And that's be good stewards of what God has entrusted to us. Well, today I'm grateful for this clarity and the peace that comes from God's word.

Even in something as mundane as taxes, he gives us wisdom and he gives us guidance to help us navigate our responsibilities with confidence and integrity.

Now, Beth, let's talk about why estimated taxes are so important, not just for you, but for anyone who's running their own business or earning income outside of that W2 job. Because here's the thing, when you don't pay your taxes on time, the IRS charges you penalties and interest on what you owe.

That's not a fun place to be. But it's not just about voiding taxes. A lot of people think, well, it's just, I don't want to pay taxes. I don't want to pay estimated taxes.

Well, here's the thing. Estimated taxes are really about cash flow management. And you may ask, why do you say that? Well, here's the deal.

When you stay on top of your tax payments, and I have a lot of clients I've convinced to do this over the years, you're not scrambling at the end of the year to come up with a big lump sum.

In fact, I just had all of my year end meetings back in December and with a lot of clients, we had a discussion that went like this, hey, Ralph, how much am I going to owe? And we worked it out to the best of our, you know, we'll see where things are and all that kind of thing.

And they'll say, ah, you know, you're going to owe about $10,000. Well, several of my clients said, ralph, that's great, let me go ahead and make that final payment.

So I don't have that huge responsibility here at the end. So if you're doing it correctly, you're spreading that responsibility out over the entire year.

And trust me, that makes it more manageable and helps keep you in control. Now, I have some clients that don't want to pay estimated taxes at all. That's fine. And I'll talk about why that's probably not a great plan.

Because they're going to get with penalties. They could get hit with interest. But let's not forget, staying compliant with the IRS means less stress for you.

You don't want to deal with issues with the irs, and it gives you more confidence in your ability to run your business successfully. So, Beth, let me share a story with you about a client of mine. We'll just call him Mike. Now, Mike was a freelance graphic designer.

He loved his work, but he dreaded tax season. And let me just tell you, this dude had a knack for freelance graphic design. Some of the stuff he made was beautiful.

I, I don't have that level of creativity. I don't have that knack for that. But when it come to taxes, that was not his thing.

And every year he said, to me, it's like a bombshell because he wasn't setting aside money for taxes. And when the IRS bill came due, he would come in and get his taxes done. And he would sit down with me and he'd say, ralph, okay, what's the damage?

And I would say to him, I said, you know, Mike, I told you there's a couple things you could do. I'm not even going to go into, like, the whole idea of setting up a corporation to save money. That's a topic for another show.

But I said, I told you all along to be setting aside money. Ah, yeah, Ralph, I never got to it, but, you know, always something came up. I had this bill with the kids. I did this repair at the house.

So every year, tax season, he was scrambling. And because he was scrambling, we would do his tax return.

He wouldn't have all the money to make the payment, so he was going to get hit with penalties and interest. And there wasn't a whole lot I could do because he wasn't doing what he needed to do. And he said something that stuck with me. Every year.

He said this. We get done the tax appointment. I tell him what he owes. He says, rob, I just feel like I'm failing. Well, Beth, maybe you can relate with that.

But here's the truth. Mike wasn't failing. He just didn't have the information or tools he needed to succeed. So once I really sat down, I had the heart to heart with Mike.

I think he finally understood what estimated taxes were and he was able to take action. So in Mike's case, here's what we did. I got tired of every year him coming in and saying, ralph, I don't understand why I owe so much.

So I created a simple system for him. And I said, here's what I want you to do every time you get paid.

Because he basically did jobs, you know, he had this project, and that project he would create, you know, a. A particular project for a company or for an individual. I say, here's what I want you to do, Mike. Real simple process.

I want you to take, as soon as you get that payment, take 25% of it and put it into a separate savings account. And we're going to call that savings account taxes.

I said, I want you to go to your bank, I want you to create another checking account or savings account, whatever you want to call it, and just call it my tax account. And every time you get paid, I want you to put 25% in that second step, we set up calendar reminders I said to him, here, give me your phone.

I remember the first time we did this. I said, give me your eye. He got an iPhone just like I've got. I said, here's what we're going to do.

We're going right now on your iPhone, and we're going to set up four calendar events.

We're going to set up one for April 15th, we're going to set up one for June 15th, we're going to Set up one for September 15th, and we're going to set up one For January 15th. I don't want you to forget. Those are the days that I want you to take that 25%.

And I showed him how to break it into the pieces between federal and state, because he's a Delaware guy, so he's got to pay federal and state taxes. I said, but here's the thing.

When this pops up on your phone, that's the day that you're going to log into IRS.gov and you're going to log into the State of Delaware website and you're going to pay those estimated taxes. Because here's the deal, we automated it, and that's the key to this thing if you want to be successful with estimated taxes.

And again, there are other things to do. But we automated it for him. So every time he got paid, he had it in his mind. He says, okay, I got to do what Ralph told me to do.

Let me put 25% automatically into that savings account and see then the next year.

By the end of that year, Mike not only had enough to cover his taxes, and I remember him coming in that next tax season, and he says, ralph, I did exactly what you said. I made all those quarterly payments. I can't wait to see what it looks like.

And I did his taxes, and I knew the numbers, and he was actually getting a small refund. But I didn't tell him that at first. I said, hey, here's the good news, Mike. There is no penalties this year. There's no underpayment penalty at all.

And I said, here's a surprise you weren't expecting. You're actually getting a small refund. And he said, raf, I don't believe it. I can't believe what happened.

I said, yeah, because you had an automated system and you did what you needed to do throughout the year. Now he took that refund he was doing. He just rolled it forward into next year's auto estimated taxes.

He said, ralph, I'm gonna have a better year this year. And he told me something later he said, ralph, that system gave me peace of mind and made me feel like I was finally in control of my finances.

And I said, you know, I think about it, how many years it took for him to get to that point. But see, Beth, I want you to experience that same transformation that Mike did. I want you to feel confident about this.

I don't want you to feel like it's a burden. I don't want you to be afraid of taxes. There's no reason to be. So here's how you can get started, Beth. Here's what I'm going to encourage you to do.

Estimate your income for the year. Just. Just say rap. Here's what I think my income is going to be for the year. Now, a lot of people take last year's taxes.

You can use that as a starting point.

When I work with tax clients or business clients, one of the things that when we talk about estimated taxes, we do a look back and say, you know, for Mike, for example, I would say to Mike, okay, last year you did this much in sales. What do you think your sales are going to be? Well, Ralph, I think this year I'm going to do a little bit more than that. Fantastic.

Let's add 20% to that. And how about expenses? Are you planning any big expenditures?

No, I'm really got things down to a sign, so I expect that I'm just going to have higher income. So that's going to be our starting point.

We know what to expect, and we're going to estimate our taxes based on that income for the prior year and then whatever additions we're going to have for this year. Second thing, just like I did with Mike, set up that separate savings account, label it taxes, and listen, here's the thing.

What goes into that savings account, the only time it comes out is if you're sending in quarterly estimated tax payments or. Or you're sending it what you owe at year end, and then I'm going to encourage you. Now, Michael, I think was a little light at 25%.

I tell clients now to put between 25 and 30% of every payment they receive into the account.

Now, if you've got the type of income where it's continuous, like maybe you're a freelance contractor or something like that, so you know you're going to get a certain amount each week, then you don't have to worry about taking that 25 or 30% just to set it and forget it.

And then just like I did with Mike, mark your calendar, go on to your calendar, program Whether you use an iPhone or Android, whatever technical thing, maybe you're one of these old school people that has the handwritten calendar. What I want you to do is write down those dates and they're not actually on the quarter, which is a little bit confusing to people.

But write these dates down, put them in your calendar. April 15, June 15, September 15 and January 15. And those are non negotiable.

I'm gonna encourage you to do it a few days before so you get the money in by that date.

But put those on your calendar and make them a non negotiable agreement that you make with yourself to make sure you're putting that money aside for taxes. Now, another thing you can do is the IRS has got some great tools on their website.

They provide something called an estimated tax worksheet which can help you calculate your payments. Now, again, you can also work with somebody like me. I'll talk to you a little bit later in the show how you get in touch with me.

You can just go to askralph.com and click on book a call with Ralph and I can help you put together a plan. But use those tools. Use those things I talked about again. Number one, you're going to estimate your income for the year.

Second thing, set up that separate savings account like I said, label it taxes, put 25 to 30%, mark your calendar and then make sure you're updating that as you go. Because maybe you've had a really good year and now all of a sudden you're worried about, hey, this is really going to take off.

You want to make sure that you're in a safe place and you don't owe taxes. See, because the key is, is to start small. I'm not asking you to do anything enormous. Just start small and build a habit.

Because once you've got a system in place, and this is true of most things, you're going to feel less overwhelmed, you're going to feel more confident and you're going to be able to manage your taxes effectively. And that's really what you've asked today. That's exactly what you're trying to accomplish.

Let me talk to you for a minute about something I see every day in my accounting practice. You know that feeling when you're staring at tax forms and your stomach's in knots? This is stuff you don't do on an everyday basis.

Maybe you're like, Mike, you're a freelance graphic designer or you do something else. You just don't understand taxes. And guess what? You don't have to.

You know, maybe you're worried about missing deductions or maybe you caught little blurb on the news or on one of these social media things. You heard about new tax laws, but you're not sure how they affect you. Or maybe you don't even understand what we just covered today.

You don't understand the estimated tax process. You're saying to me, rob, I don't even know where to start. But that's exactly why I founded sideju Amazing Group. That's my accounting practice.

And here we don't just file your taxes because that's the easy part. We build a strategic plan to legally minimize what you owe because you have a right to pay your fair share and to make that as small as possible.

So I'm going to encourage you today, reach out and schedule a book a call with me. You do that by going to ask graph podcast.com tax prep. That'll put you right onto my schedule. And it doesn't matter where you are.

I work with clients all over the United States doing taxes. I have clients in Dallas, Texas. I got clients in Northern California. I've got clients in New York. I got clients in Florida. You get the idea.

Wherever you are with, with the use of technology now with Zoom, the truth is, it's like you're sitting right in front of me. So don't wait until you're stressed about deadlines or maybe you're worried about you got that audit notice.

Let's make sure you never pay more than your fair share in taxes. Again, I encourage you go to askralphpodcast.com taxprep and let's do your taxes together. Well, let's start with our reflection questions today.

I always like to end the show with some reflection question. We can kind of digest what we talked about. So let's start with the first one.

Number one, are you setting aside enough money from your income to cover your tax obligations or are you, are you in that cycle where Mike was that constant state of I'm dreading going to get my taxes done because I know they're going to tell me I owe and I haven't set aside the money. So ask yourself that difficult question. Are you setting aside enough money from your income to cover your tax obligations? Second question.

That's what I work with in Mike and I encourage you to do the same thing. Beth, do you have a system in place to track your income and expenses accurately?

You notice when I asked started the questions, I said, okay, what was your income? What were your expenses? Well, Guess what? If you don't have a system in place to do that, you're going to be even farther in that hole.

You're going to be digging out from that. And that's the thing. You want to develop a plan ahead.

And that's my third reflection question today, is how can planning ahead with your taxes help you honor God and reduce financial stress? Because that's the key to this. You want to have peace of mind.

You want to know that, listen, taxes are a byproduct of the work you're doing every day for a couple reasons. Number one thing, you want to know how your business is doing.

If you don't have a system in place that shows how much income you have, shows what your expenses are, how do you make good decisions? One of the things that I do with all of my, what we call our monthly clients here is we work with them every month.

We, we connect their bank accounts. We do all of those things even with our individual clients.

I show them how to keep track of their taxes throughout the year so they don't have these big surprise things at the end of the year. It is so critical that you have a plan in place. So again, three reflection questions.

Are you setting aside enough money from your income to cover your taxes? Have you built that system to track income and expenses and also, you know, get ready for those estimated taxes? And how are you planning ahead?

Because, listen, doing your taxes is great. That keeps you out of trouble with the irs. It keeps you in compliance. But the true value. Sounds like a hardware store.

But the true value is in tax planning. It's one of the things I stress to my clients every day. Let's sit down and plan.

Because if you have a plan, you're going to be able to honor God, you're going to be able to reduce your taxes, and best of all, you're going to reduce your stress, which is going to give you peace of mind. Well, Beth, I hope this gave you the clarity and confidence you need to tackle estimated taxes. Remember, you're not failing.

Listen to me, you're not failing that. Just like I said, Mike, you're learning. Well, tomorrow's episode will be all about tax relief. It's like tax week here, but it's tax season.

It makes sense. So tomorrow we're going to talk about tax relief. Specifically, why some solutions.

You know, these knuckleheads on TV and in print, advertisement and all over social media saying, hey, we can settle your taxes for pennies on the dollar. Well, I'm going to share tomorrow why some solutions are actually worse than the problem itself.

It's going to be a real eye opener, so make sure you tune in. Now remember, as I close my passion is to help you achieve financial success.

I want to see you live out your dreams and I want to see you grow in your faith. I want to see you pay as little taxes as possible. Also, don't want you to be stressed about it all year long.

And you know this as I always close the show. Together we can master your finances from a Christian perspective. So as I always end this show, stay financially savvy and God bless you.

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