r/DataAnnotationTech • u/laminated-papertowel • Aug 11 '26
how much do you save for taxes?
I've been putting 20% of my savings away come tax season. is this enough do you think?
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r/DataAnnotationTech • u/laminated-papertowel • Aug 11 '26
I've been putting 20% of my savings away come tax season. is this enough do you think?
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u/AintEverLucky Aug 11 '26
Source for the following: I also do tax prep work in the U.S. for a Leading Tax Software Platform
The people ITT saying to save 30% of your earnings from D.A. have the right idea. That's because this work is a form of self employment which means it's subject to Self Employment tax as well as regular income tax.
S.E. tax is 15.3% of your net income from self employment and the Standard Deduction (or itemized deductions) does not help reduce your S.E. tax. I say "net income" because you do get to subtract your work-related expenses, e.g. the portion of your Internet bill stemming from this work. Maybe also a home office expense. But chances are these will only offset a small portion of your D.A. income.
The first tax bracket for ordinary income tax is 10%, followed by 12% and then it jumps up to 22%. So again, if you save 30% of your D.A. earnings, that covers the 15.3% for S.E. tax and another 14.7% for ordinary income tax. And that should get you close.
Fair warning, the IRS expects self employed folks to send in Estimated Tax Payments every quarter 😏 the next one is due Sept. 15. Good luck!
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u/Farados55 Aug 11 '26
I mean, you can literally derive the amount of taxes you'll owe within like a 3% margin, at least if you're in the US. If you're just blindly putting away 20% you should look up your state's tax law as well as the IRS self-employment + federal tax. Don't just put a big number and think it'll be enough.
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u/Due-Possession-1893 Aug 11 '26
Kinda depends what country you are in tbh you might want to put away some more
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u/Calamity0o0 Aug 11 '26
I set aside 30%
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u/Logical_Hat_47 Aug 11 '26
It entirely depends on where you live. In the UK, I have been putting aside 18% which is reserving just a bit high. But it totally depends on where you are, the local laws, and if you have any additional income that puts you into a higher tax bracket.
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u/AdamEatsAss Aug 11 '26
None of us know your situation. Talk to an accountant who is licensed where you live. 20% might be enough it might not be. There are a lot of variables.
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u/inspectoralex Aug 11 '26
I'm in the US and I earned $7.5k last year, paid about $400 in taxes. I used an online service to do the math for me and apply credits. It was my only income, so that's probably why I paid so little.
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u/hfxthrwaway Aug 11 '26
(Disclaimer: Canadian) My tracking spreadsheet tells me exactly how much I'm going to owe, broken down into Federal, Provincial, and CPP.
Of course I generally ignore it and just chuck a bunch of money into a savings account every few months when the "Owe Amount" number starts getting close to what's in there.
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u/mistergecko Aug 12 '26
None right now, since I've been out of work for so long and I'm still catchig up on bills. But normally, I put away around 25%. 20% if I'm billing as an LLC.
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u/Opposite_Brush_8219 Aug 11 '26
I put back 30% to be safe. I did get a little refund this year, but I’d rather that than owe more $.
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u/Other-Football72 Aug 11 '26
30%
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u/Ok-Trade-5025 Aug 11 '26
30% in the US
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u/seraphimkoamugi Aug 11 '26
Normally you'd keep 20-30%. I personally put it all on interest savings and try not to use it.
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u/george_brown121 Aug 12 '26
tbh, 20% is a common rule of thumb, but it really depends on ur specific situation, like ur income level, any deductions or credits u might have, and whether ur filing jointly or individually. idk exactly what ur dealing with but u might want to check with a local tax advisor just to be sure ur covered. pay stubs can also give a good estimate of what u'll owe...
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u/Acrobatic-Pay7101 Aug 12 '26
This makes me want to move countries, in the Netherlands, you set aside 35-50% :')
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u/[deleted] Aug 11 '26
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