Which method might Bill choose to manage his taxes effectively throughout the year?

Filing quarterly tax payments is a proactive approach that allows individuals, such as Bill, to manage their taxes effectively throughout the year. This system is particularly beneficial for those who are self-employed or earn income that isn't subject to withholding, as it helps to avoid a large tax bill at the end of the year. By making estimated tax payments throughout the year, Bill ensures he is meeting his tax obligations steadily, which can alleviate the stress of a significant financial burden during tax season. This method also allows for better cash flow management, enabling him to allocate his resources more efficiently over time.

The other options do offer potential tax benefits or help with financial management, but they do not provide the same level of ongoing tax management. For instance, investing in tax-free bonds offers tax advantages on interest earned, but it does not address the need for regular tax payments. Banking on a tax refund assumes that overpayment has occurred, which isn’t a strategy for managing taxes but rather a potential outcome of having withheld too much. Cutting personal expenses, while beneficial for overall financial health, does not specifically target tax management. In this context, filing quarterly payments stands out as the most direct and effective method for managing tax liabilities throughout the year.