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This App Will Help Freelancers Avoid Tax Penalties

Mobile banking app Qapital is adding the ability to routinely set aside part of your income for taxes.

This App Will Help Freelancers Avoid Tax Penalties
[Photo: via Qapital]
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Nobody enjoys filing taxes. But for freelancers and contractors, the process is even more complicated, in part because they can be required to pay estimated taxes on a quarterly basis, and face steep penalties if they miss those deadlines. For workers beholden to these rules, the last quarterly payday of 2015 is right around the corner–on Tuesday.

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Qapital, a money management app that makes it simpler for users to save, unveiled a feature today that could help freelancers save up enough for those pesky tax payments. Dubbed the Freelancer Rule, Qapital’s new tool will automatically take a predetermined percentage out of your paycheck–say, 30%–and set it aside for estimated taxes. (It’s not too different from how your employer withholds taxes from your paycheck if you’re a full-time staffer.) When the IRS comes knocking, Qapital users simply have to fork over that money, rather than scrambling to make the payment.

Qapital is by and large targeting a younger crowd: The app was founded to capitalize on uneven millennial saving practices. In June, the company introduced IFTTT (If This Then That) functionality, which meant users could set up savings goals based on their spending habits or other actions; if they spent x number of dollars on coffee, they should then put away y number of dollars into their savings account. “It’s moving away from calculation and toward that goal you emotionally care about,” Qapital CEO George Friedman told Fast Company earlier this year.

About 38% of millennials are freelancing now, as compared to 32% of the rest of the U.S. population, making Qapital’s latest move yet another play for the under-35 set.

About the author

Pavithra Mohan is a staff writer for Fast Company.

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