I'm a CPA: 5 Simple Ways Side Hustlers Can Stay Ahead of Quarterly Taxes
A side hustle payment can feel like a windfall until expenses and the IRS take their cut. Tax professionals say the easiest way to stay ahead of quarterly taxes is to build tax money into the routine as income arrives, rather than scrambling to find it four times a year.
“It’s about treating your side hustle like a mini-business from day one: Separate accounts, separate tracking,” said former CPA Rob Pfleghardt, founder of VoraPrep, a professional exam-prep platform.
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Here’s how to set up a simple system that keeps the money visible, tracks actual profit and makes quarterly deadlines far less stressful.
1. Open a Tax-Only Account
Start by giving the IRS money its own place to sit. Pfleghardt recommended a dedicated high-yield savings account separate from everyday spending and business expenses.
When a side-hustle payment arrives, transfer the tax reserve immediately and leave it there until payment time.
“This isn’t about exact calculations every time; it’s about building a consistent habit,” he said.
By moving the money before it blends into the rest of the month’s cash, the quarterly payment is already funded when the deadline arrives.
2. Use Net Profit
Once the tax-only account is ready, the question becomes how much of each payment should go into it.
Say a side hustle brings in $1,000, but costs $500 in supplies, software or other business expenses. The profit is $500. At a 30% tax reserve, $150 would move into the tax account.
“Using gross income for calculations is more simplistic and requires less math for the transfer, but net profit is more precise,” said Joel Salas, an enrolled agent and managing partner at Elevated Tax Strategies.
3. Set a Quarterly Target
With money already going into a tax-only account, the next step is knowing how much should be paid each quarter. Jason Hope, CPA and founder of Hope Financial Consulting, recommended using the total tax from the previous year’s return as the target, split into four equal estimated payments.
“Since we may not always know what this year’s tax owed will be, I recommend always paying 100% of the previous year’s tax,” he said.
That approach gives side hustlers a number to plan around instead of repeatedly projecting an unpredictable year.
According to the IRS, taxpayers whose 2025 adjusted gross income exceeded $150,000, or $75,000 if married filing separately, generally need to use 110% of their prior-year tax.
4. Do a Monthly Check-In
Automatic transfers keep tax money from disappearing. A quick monthly review, especially two weeks before the quarterly tax deadline, helps make sure the amount being saved still fits the side hustle.
“Review your spreadsheet once a month, just a quick check,” Pfleghardt said.
Salas also suggested comparing the amount set aside against a rough projection. If the amount saved is ahead of that projection, the reserve percentage can come down. If it falls short, increase it.
5. Pay From the Account
When each deadline arrives, the tax money should already be waiting in the dedicated account. Federal estimated-tax payments can be made online through IRS Direct Pay, which lets individuals pay from a checking or savings account at no cost. The account may need to cover state taxes, too.
Salas said side hustlers in states with income tax may need a higher reserve to cover both federal and state liabilities, while local or city wage taxes can raise the amount further.
After each payment, save the confirmation number with the tax records.
“This approach removes decision fatigue and uncertainty,” Salas said. “You no longer have to guess what you owe, and the money is ready. It also creates clean records, establishing a clear trail of income and expenses rather than mixing funds in a personal checking account.”
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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