Important point everyone is missing: If you use the standard mileage deduction rate for the first year, you can switch between standard mileage and actual expenses in future years. But if you use actual expenses the first year, you're LOCKED IN to using actual expenses for the life of that vehicle. THIS IS HUGE if you're buying a car specifically for gig work. Get professional advice before making this decision because it could cost you thousands over the life of the vehicle if you choose wrong in year one. Also, keep a mileage log no matter what method you choose. IRS requires it even if you go with actual expenses. There are good apps for this - I use Stride.

Something else to consider that might affect your decision - if you're consistently making $650/week between both of you from gig work, you're looking at around $33,800 annually in self-employment income. This means you'll owe self-employment tax (15.3%) on top of regular income tax. A dedicated business vehicle can help offset some of that tax burden, but make sure you're also setting aside money quarterly for estimated tax payments. The IRS expects you to pay as you go when you're self-employed, not just at year-end. Also, don't forget about business insurance. Your personal auto policy likely won't cover you during commercial activities. You'll need either rideshare coverage or commercial insurance, which will be another deductible business expense if you go the actual expenses route. One more tip: if you do buy a dedicated gig car, consider getting it inspected and any needed repairs done before you start using it for business. Those initial repair costs could potentially be deductible as startup expenses.

This is such a common situation right now! Based on what you've described, the main culprits are likely: 1. **401k contributions reducing withholding**: Your 11% contribution lowered your taxable income, which is great, but it also means less tax was withheld from each paycheck throughout the year. So while you're paying less total tax, you're also getting less back as a refund. 2. **Overtime pay withholding issues**: When you get overtime, the payroll system often withholds at a higher rate assuming that's your normal pay level. But if your base salary + overtime put you in a different tax bracket temporarily, the withholding calculations can get wonky. 3. **Child Tax Credit changes**: The pandemic-era expansions have mostly expired, and depending on your income level, you might be getting less credit per child than in previous years. The fact that your state refund stayed consistent suggests this is federal tax law changes rather than errors in your filing. You might want to run the numbers on your total tax liability for both years - I bet you'll find you actually paid less total tax this year, just with better withholding throughout the year. Sometimes a smaller refund is actually a sign of a healthier tax situation!

I'm dealing with almost the exact same situation! My refund went from $6,800 last year to $2,400 this year and I was panicking that I'd made some major mistake. Like you, I started contributing to my 401k for the first time (8% of my salary) and got a promotion that increased my base pay. After reading through all these comments, it's starting to make sense. The 401k contributions reduced my taxable income, which is good, but also meant less tax was being withheld from each paycheck. So I was actually keeping more money throughout the year instead of overpaying and getting it back as a refund. I think the hardest part is the psychological shift - I've always looked forward to that big refund check, so seeing it cut by more than half felt like something was wrong. But mathematically, if I had an extra $300+ per month in my paychecks because of better withholding, that's actually better than waiting for the government to give me my own money back with no interest. I'm definitely going to use the IRS withholding calculator to make sure everything is set up correctly for next year. Thanks everyone for the explanations - this thread has been super helpful!

Has anyone used the online form for 7004? I tried submitting electronically but got an error about the "consolidated return" field even though I left it unchecked. Is paper filing more reliable for partnership extensions?

I had a similar electronic filing issue with 7004 last year. The problem was that my tax software was automatically populating certain fields based on entity type detection, even when I thought I had left them blank. Try checking if your software has an "entity type" or "return type" setting that might be influencing how it handles the consolidated return question. Also, make sure you're using the correct version of Form 7004 - there are different versions for different entity types. If the electronic filing keeps giving you trouble, paper filing is definitely reliable for partnership extensions. I've never had issues with paper 7004s, and for something as straightforward as a partnership extension, it might be worth avoiding the electronic headaches altogether.

My company offers $150/month for transit and they don't withhold taxes either. My accountant said as long as it's under the IRS limit and used for qualified transportation, I'm good. The 2025 limit is like $300 I think?

I've been dealing with a similar situation at my company and wanted to share what I learned after doing some research. The tax treatment really depends on HOW your employer is providing these rideshare reimbursements. If they're treating it as a "commuter benefit" under IRS Section 132(f), then up to $300/month (for 2025) can be tax-free. However, many employers mistakenly think all rideshare reimbursements automatically qualify, but the IRS has specific rules about what counts as "qualified transportation." For rideshares to qualify as tax-free, they generally need to be part of a formal commuter benefit program and used for specific purposes like getting to/from transit stations or for carpooling arrangements. Just regular Uber/Lyft rides from home to work usually don't qualify unless there are special circumstances. Since you mentioned it's showing up on your paystub without taxes withheld, I'd double-check with your HR department about how they're coding this benefit. You might also want to keep records of exactly what these rides are for, just in case you need to justify the tax treatment later.

Has anyone tried using the Stride app for tracking mileage instead of manually logging it? I'm doing DoorDash part-time and wondering if the automatic tracking is accurate enough for tax purposes.

For anyone still struggling with this, I want to add that you should also make sure you're separating your business miles from personal miles correctly. I learned this the hard way when I got audited last year - the IRS wants to see that you're only claiming miles driven specifically for DoorDash deliveries, not driving to the store for groceries or personal trips. Keep detailed records showing when you started your dash, your route between deliveries, and when you ended your dash. I use a simple notebook and write down my odometer reading at the start and end of each shift, plus note any personal stops I made (which I don't include in my business miles). Also, if you drive to a specific area to start dashing (like driving from home to a busy restaurant zone), those miles to get to your "work area" can usually be deducted too. Just make sure you can justify that it was for business purposes. The key is being able to prove to the IRS that every mile you claimed was legitimately for business if they ever question it.