In 2026 I will make the jump from W2 to 1065, and will be primarily compensated via a quarterly partner draw. I already have a good system for estimating my quarterly federal taxes, which will be around ~$30-50k. What I don’t know is where to keep the cash between draws and tax payments. Is HYSA my only option? Or could I do a high-liquidity MMF? Does anyone have a good system that works?

  • HYSA or MMF both seem fine, you know when they are due so planning to make funds available should be simple.

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  • Mine sits in a HYSA. I use Ally and made a ‘bucket’ for estimated quarterly taxes so I mentally separate it from everything else.

    There might be a way to mildly optimize more but for ~3 months of interest it’s just not worth the time or headache for something more complicated, at least for me

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  • Yep, MMF or HYSA are the options. I do vanguard mmf bc it auto sweeps deposits into the fund and I already ran taxable brokerage through them. I am sure there are other options that can auto sweep into mmf just didn’t check once I confirmed vanguard worked.

    I am also on non w-2/non withheld comp and send 40% of every incoming payment to that vanguard account that I earmark for nothing but taxes.

    Tip: if you use Monarch or another aggregator hide that account so you don’t get attached to it being included in your NW number…

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  • Also look into SGOV (an ETF investing in short term treasuries) for usually slightly higher returns and being tax-free at the state level.

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  • We use the quarterly payouts to pay that same quarter’s taxes, so it just sits in our MMF for a few days/weeks until the taxes are due. Even if your setup is different and you are using the prior quarter’s payout or other funds, this is probably still the way to do it. 

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  • HYSA or a money market fund like VMFXX would be your best bet. both give solid returns while keeping the cash liquid for quarterly payments. i like using BankTruth to see which HYSA rates are best before moving any money around.

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  • Over pay your taxes. The irs will send back to you in 6 months at 12% interest

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  • I hard a large quarterly estimate so I bounced between HYSA and 3 month t bills for slightly more juice

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