What to do with Cash Saved for Taxes

I just put it in a high yield savings account(hysa) of your choice and earn the 3-4% interest these days. Probably shouldn't do anything risky with money you know you'll need to relinquish.

Also I'm assuming your paying quarterly taxes and not just paying a lump sum at the end of the tax year. Otherwise you're going to get hit with an underpayment penalty.

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For the first time, I’m self-employed and having to personally hold back money for taxes. Let’s say, by the end of 2023, I hold back a grand total of $30k which will go to federal taxes in April of 2024.

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Remember if you're self-employed, you pay the combined employee and employer amount on SS and Medicare now. . This amount is a 12.4% Social Security tax on up to $160,200 of your net earnings and a 2.9% Medicare tax on your entire net earnings. If you earn $160,200 that is $19k and $4600+. I am sure you are aware of it, but I mention it because many people forget or are shocked by those taxes in their first year of self-employment.

For the first time, I’m self-employed and having to personally hold back money for taxes.

Welcome to the club.

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Where is a good place to park that cash and make a little more off it?

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I just park mine in a checking account since I pay quarterly. I got hemmed up last year, thankfully I saved enough this year. I was as tax broke as you could be last year. I paid in triple what I did in 2020, had 40k earmarked, I needed another 50. It was awful.

How much are you making? Definitely incorporate if you haven't.

i have it worked out almost perfectly that my return is a very similar amount as my homeowner/flood insurances. and they are both due in May. So the timing works out well.