Simplifying Estimated Taxes with MyPocketFP

 Do I Need To Pay Estimated Taxes?

Ever been blindsided by a tax bill that wipes out your month? We break down estimated taxes with clear rules, real examples, and a cash‑flow mindset so you can stop the April panic and stay ahead all year. Jason Taylor, CFP and creator of MyPocketFP, walks with us through who actually needs to pay estimates, when penalties kick in, and how to use profit—not just revenue—to set the right numbers.

We start by separating clean W‑2 situations from the messy middle: 1099 contractors, small business owners, landlords, and anyone juggling side hustles or tips. If income isn’t getting withheld, the IRS expects you to pay as you go. You’ll learn why owing over $1,000 can trigger penalties, when first‑timers might get relief, and how midyear check‑ins in June and November reduce risk. Jason explains the quarterly schedule—April, June, September, and that crucial January payment—and why January 15 gets special attention once your books reflect the full year.

We get practical about cash management. Should you hold the money because bank yields beat the underpayment penalty? Maybe—but behavior matters. If you don’t wall off tax savings, that “arbitrage” can turn into stress and debt. We cover servers and tips, the importance of honest tracking, and how policy chatter affects reporting habits. Then we show how MyPocketFP simplifies the process: upload a pay stub to confirm withholdings, add a simple profit and loss for your side income, and get a live estimate that adjusts as your year changes.

By the end, you’ll know whether estimates apply to you, how to calculate them with confidence, and how to use an accountability plan to avoid surprise balances that wreck your cash flow. Subscribe, share this with a friend who freelances, and leave a quick review to help more people make smarter, calmer money moves.

To learn more about MyPocketFP visit:
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Transcript

SPEAKER_01 0:03

Welcome to My Pocket FP, the podcast where your wallet finally meets its financial planner and they actually get along. Join your host Jason Taylor, certified financial planner, money sensei, and your guide to financial freedom. Whether you're planning for retirement or just trying to figure out where all your money went last weekend, we've got you covered. Get ready to take control of your financial life with smart tips, surprising insights, and yes, an app that fits right in your pocket. This is My Pocket FP, because your future deserves more than guesswork.

SPEAKER_00 0:47

Understanding estimated taxes can help you avoid penalties and keep your cash flow running smoothly. Welcome back, everyone. I'm Julie Schwenzer, co-host and producer in the studio with Jason Taylor, certified financial planner and creator of My Pocket FP. Jason, thank you again for joining us and teaching us.

Who Should Pay Estimates

SPEAKER_02 1:06

Thank you, Julie.

SPEAKER_00 1:07

So the big question for this episode: do I need to pay estimated taxes?

SPEAKER_02 1:13

Yes. So there's several things to think about when it comes to estimated taxes. The first is, you know, what kind of employment you have. If you are uh just W-2 employed and you don't have rental properties, you don't have any outside businesses, and you find yourself owing taxes, it's usually best just to adjust your W 4 at work and not mess with the estimated payments. Now, if you have income from other states, you have income from business, it's best to maybe pay some estimates throughout the year so you're not surprised at the end of the year.

SPEAKER_00 1:45

Is that the big difference there, other than it it's not necessarily due in some cases, but it's better to break it apart?

SPEAKER_02 1:53

Um Well, you you will be penalized if you don't pay estimates. Um if you owe more than$1,000 come tax time, you'll get penalized for not paying estimates, especially if you owed in the prior year as well. Now, if it's your first year owing, you can get that penalty waived.

SPEAKER_00 2:12

Okay. Some people are signed some relief if that this might be their first time. And then uh if you could expand too um on who is affected by estimated taxes, what about people without regular withholdings?

SPEAKER_02 2:30

Yeah, that that would be people who are 1099 or contract labor, or people with uh rental properties or some other outside income um that does not have any withholdings would want to pay estimates.

SPEAKER_00 2:43

And then does the IRS follow up pretty quickly? It's so many figures to track, and so many people have different um job situations and income streams, like you mentioned. So some in some cases, you know, you get a surprise later if you didn't pay this.

SPEAKER_02 2:59

So really it is you know up to the taxpayer to figure out the estimated payments. Um, and that's you know, one of our programs with uh My Pocket FP actually helps clients with that. Um, our second tier and third tier levels help with that. It is helpful to you know calculate your business expenses, kind of figure out your tax situation throughout the year. Um with most clients, we do it at least twice a year to make sure they're paying enough in. Uh, we'll do it in June and again in November to make sure they're you know paying enough uh estimated taxes in. You will not find out from the IRS until you file your tax return.

SPEAKER_00 3:36

So if you could walk us through, if you're using MyPocket FP to uh you know enter your information, let's say it's somebody with a regular job and then they have maybe like a side hustle or they're a server, you know, and so they're collecting money in a different way. And then like how would you enter all that information into your app?

SPEAKER_02 3:55

Yeah, so what we would have them do is upload their pay stub uh into apps so we can see how much taxes haven't taken out of their pay stub. And then we'll ask them for a profit and loss or all their income from whatever side hustle they have in order to calculate what their taxes would be as of that date.

Tips, Side Income, And Reporting

SPEAKER_00 4:12

And what about servers or people who receive a lot of tips? I mean, how does that work? We know that President Trump, you know, he'd said when we're not gonna tax um servers anymore and the hospitality industry for their tips. I don't even know. Did that even come into effect? But how do you do all that with like these cash tips?

SPEAKER_02 4:30

You know, cash tips are hard because a lot of people don't actually put them on their taxes. Um, so they don't pay taxes on them. And I think that's partially why they're making it um to where they don't have to pay taxes on tips now, because they want people to start reporting them. Um and I think once they start reporting them, then they might flip the switch and say, we know you're making tips now. Uh and here's the tax on them. Um so they are the you know partially um tax-free now, up to a certain point.

SPEAKER_00 5:03

And if we go back to the estimated taxes and how they're calculated, um how can business owners be prepared for that?

SPEAKER_02 5:11

What should they pay attention to profit, all their income minus their expenses, and just really look at the bottom line and you know how much profit they have.

SPEAKER_00 5:23

And then the deadlines. What does this all do throughout the year? Is it usually like the 15th or something?

SPEAKER_02 5:29

The the deadlines are are kind of funny because the first deadline is actually April 15th, just like your actual taxes do. Um, and then it goes to June, which is kind of odd. Um, because you only have a two-month gap. And then after that, it makes a little more sense. Um, because then you go into September for the next estimated payment and then January. And then January is the one that really we focus on with a lot of clients. Um, because by then your book should be done through December 31st, and you should know what your profit is by January 15th. So that's the estimate that we really focus on to make sure they have enough paid in for taxes.

SPEAKER_00 6:05

Oh wow. So they're they weren't done, you know, in early December. They're not looking at a very fun holiday. Yeah, holiday break.

SPEAKER_02 6:13

It really is essential to have your books up to date throughout the year to get the proper estimate paid.

Penalties, Cash Flow, And Surprises

SPEAKER_00 6:22

And then um, does it also help uh business owners avoid, I mean, obviously avoid surprises, but it is one of the biggest motivations is not to pay penalties.

SPEAKER_02 6:34

You know, it's it's hard uh with that too, because the penalty is only 2%. And so a lot of people are like, well, I can make 3% in the bank right now, so I might as well, you know, hold on to it.

SPEAKER_00 6:47

Yeah, absolutely.

SPEAKER_02 6:49

Which mainly the surprise that we found to be an issue because you know, if people owe you know$10,000,$15,000 and they've already spent it, it's a problem.

SPEAKER_00 7:00

Is this something also going back to our previous podcast that is overlooked from based on your experience with business owners that are newer to the game, is this something that they've overlooked?

SPEAKER_02 7:12

A lot of times newer you know, a lot of employees, 1099 um uh employers are getting better at warning people about this. Uh in the past it used to be a lot worse. Um but yeah, occasionally you will have someone surprised their first time doing a you know the the gig economy.

SPEAKER_00 7:30

And the overall, would you say then even though it's more frequent, it's less it's less painful for some taxpayers because it's just a shorter amount of time they have to cover and go through to estimate that. Okay, yeah. So it's it's more like uh a quick quick painful moments, but then it's that it's done.

SPEAKER_02 7:52

Yeah, it's it's better than you know finding out you know like April 1st that you owe a bunch of money, do April 15th.

SPEAKER_00 7:58

Yeah, absolutely. Yeah, that that would hurt quite a bit. So all right. Well, Jason, thank you for breaking this down. It was really helpful and a great reminder for people to take a look at those estimated taxes if it's applicable to them.

SPEAKER_02 8:12

Thank you.

SPEAKER_00 8:13

And use my pocket FP to figure out if it is applicable in your life.

SPEAKER_02 8:17

So yeah, and that's that's one thing too, you know, with estimated taxes is the more your tax professional or tax preparer knows you, and if they do planning, the more they can help you. And a lot of it is just asking for that help. But if they don't have a tax professional, that's where my pocket FP is helpful.

SPEAKER_00 8:36

Okay, thank you so much.

Final Advice And CTA

SPEAKER_01 8:42

Thanks for tuning in to My Pocket FP, where we believe small monthly changes can make big positive changes in your financial end game. If you're ready to level up your money game, head over to mypocketfp.com and download the app today. Your financial planner is now officially pocket sized and doesn't charge by the hour. Until next time, keep your goals high, your debt low, and your pockets smart.