Set Aside Money for Taxes
Estimate tax owed on freelance income and set the provision aside immediately upon receipt — before any other spending from that payment.
In this lesson
Set Aside Money for Taxes is part of Money Skills for Gig Work. This preview shows how gig-work connects to everyday family decisions such as earning, saving, spending choices, goals, approvals, or parent-guided money conversations inside Progress Penguin.
Think about this money choice
Chukwu earns 200000 in local currency from freelance work this quarter. No employer deducted tax for him.
How it works
Freelancers and self-employed workers are responsible for calculating and setting aside their own income tax. Unlike employees with PAYE, no employer deducts tax before payment. The self-employed worker must estimate their tax liability, set that amount aside from each payment received, and remit it to the tax authority at the required filing date.
Apply it to a real decision
Real-life money moment: Chukwu earns 200000 in local currency from freelance work this quarter. No tax was deducted. He should estimate his tax liability — approximately 15% under the relevant bracket — and set aside 30000 in local currency immediately. If he spends the full 200000 in local currency before tax is due, he will face a 30000 in local currency bill with nothing reserved to pay it.
Activity preview
Test the trade-off
Use the lesson to complete this short practice activity.
Practice adding money to savings
Open Requests and make a deposit request into savings so you can see how saving starts. Parent approval can happen later.
Quiz preview
Setting aside money for taxes in gig work means:
You earn 200000 in local currency/month from freelance work. At 15% effective tax rate, monthly reserve needed: