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My accountant friend in Portland told me to stop saving for taxes in a regular savings account
We were catching up over video call last week, and I mentioned I had about $8,000 set aside for quarterly taxes. He asked where it was, and I said my normal bank savings account. He just laughed and said, 'You're losing money to inflation every day it sits there doing nothing.' He told me to look into a high-yield savings account just for tax money, or even a money market fund, to earn a little interest while I wait to pay the IRS. It hit different because I always thought that money was just a liability, not an asset I could manage. I've been freelancing for three years and never considered making my tax fund work for me. It feels like a small shift, but it changes how I see all my business cash. Has anyone else set up a separate, interest-earning account specifically for tax payments?
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zarakim1mo agoMost Upvoted
My tax fund sits in a CIT Bank account earning over 4%. For eight grand, that's around $25 a month, which is way better than zero. Henry189 has a point about checking the rate, but even a small return beats a regular savings account.
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wilson.sam28d ago
Exactly. I keep my quarterly payment in a money market fund at my brokerage. It's not a huge amount, but last year it earned enough to cover the cost of my tax software and then some. That's money I was just leaving on the table before.
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Check what the interest rate actually IS on that high-yield account. A lot of them sound good but then it's only a few bucks a month on eight grand. Is that really worth the hassle of moving money between accounts for you? Your friend is right in theory, but the actual math matters more than the idea.
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