This has been such an educational thread! As someone who's also navigating the transition from W-2 to freelance, I really appreciate everyone sharing their experiences and mistakes. It's reassuring to know that confusion about the Safe Harbor rule is so common. One thing I'd add for anyone else reading this - if you're feeling overwhelmed by all the calculations and rules, don't be afraid to invest in a consultation with a tax professional, especially in your first year of freelancing. I spent about $200 for an hour with a CPA who specialized in self-employed individuals, and it saved me thousands in avoided mistakes and missed deductions. Connor, your 30% savings strategy is smart! I'd also suggest reviewing and adjusting that percentage after your first year based on your actual effective tax rate. Some freelancers find they need closer to 25% while others need 35%+ depending on their income level, state taxes, and available deductions. The key thing I've learned is that being proactive about estimated taxes (even if you mess up the first year) puts you way ahead of freelancers who just ignore it completely and get blindsided at tax time. You're asking the right questions and taking action - that's what matters most!

This thread has been incredibly helpful for understanding the Safe Harbor rule! I'm in a similar boat - just started freelancing this year after leaving my corporate job, and I was completely lost about estimated taxes. One thing I learned from my accountant that might help others: if you're really behind on estimated payments like Connor was, you can sometimes avoid or reduce penalties by filing Form 2210 with your tax return and requesting "annualized income installment method" treatment. This is especially helpful if your freelance income started later in the year or was heavily weighted toward certain quarters. Also, don't forget about the additional Medicare tax if your income goes above certain thresholds ($200k for single filers). It's an extra 0.9% that catches some high-earning freelancers off guard. Connor, your plan looks great! That separate tax savings account is absolutely essential. I also set up automatic transfers of 30% from my business checking to my tax savings account every time I get paid. It removes the temptation to spend that money and makes quarterly payments much less stressful. Thanks to everyone for sharing their experiences - this kind of peer-to-peer learning is invaluable when navigating the complexities of freelance taxes!

I've been following this thread closely since I'm dealing with a very similar PayPal reimbursement situation. What really strikes me is how many people seem to be in the same boat - it's clearly a common issue that more taxpayers are facing as digital payments become the norm. One thing I wanted to add based on my research: if you're using FreeTaxUSA like the original poster, they have a really helpful FAQ section specifically about 1099-K reporting that walks through the Schedule C process step by step. I found it easier to follow than some of the other tax software explanations. Also, for anyone still worried about this - I spoke with a tax preparer friend who confirmed that the IRS sees tons of these reimbursement situations every year. As long as you have proper documentation showing the money was just passing through (receipts, communications, matching amounts), they're not looking to penalize people for legitimate reimbursements. The key is just making sure you report it properly rather than ignoring it entirely. The peace of mind is worth the extra paperwork!

I'm really glad I found this thread! I'm dealing with a similar situation where I received $1,200 through PayPal G&S for buying camping gear for a group trip. Everyone in our hiking club chipped in to reimburse me for the tents and equipment I purchased upfront. Reading through all these responses has been incredibly educational. I had no idea about the $600 threshold for 1099-K reporting, and I was completely clueless about how to handle this on my taxes. The Schedule C approach with offsetting income and expenses makes perfect sense now that everyone's explained it. What I find most reassuring is hearing from multiple people who've successfully navigated this exact situation. The documentation tips are invaluable too - I have all the group emails about the trip planning and individual messages from people sending their share of the costs. For anyone else stressed about this like I was: keep all your purchase receipts, save any communications showing it was a reimbursement arrangement, and don't panic! From what I'm learning here, this is a very manageable situation as long as you report it properly and have good documentation.

I'm dealing with a very similar situation right now! My HSA contributions showed up on my W-2 but I just realized Form 8889 is missing from my return. After reading through all these responses, I'm convinced I need to file an amended return. One thing I'm curious about - has anyone here actually received an IRS notice about missing HSA forms? I'm wondering how long it typically takes for their systems to flag these discrepancies between W-2 reporting and missing 8889 forms. The automated cross-referencing that was mentioned sounds like it could catch this eventually, but I'm not sure what their timeline looks like. Also, for those who have filed amendments for missing HSA forms - did you use tax software or have a professional handle it? I'm trying to decide if this is something I can tackle myself or if I should bite the bullet and pay someone to make sure it's done correctly.

I'm a tax professional and see this exact situation frequently. You absolutely should file an amended return with Form 8889. Here's why it matters beyond just the documentation aspect: The IRS matching system will eventually catch this discrepancy between your W-2 HSA contributions (Box 12 code W) and the missing Form 8889. When it does, you'll likely receive a CP2000 notice asking you to explain the mismatch. It's much cleaner to proactively fix this with an amendment rather than respond to an IRS notice later. More importantly, Form 8889 serves several critical functions: 1. Establishes your contribution basis in the HSA 2. Confirms you were eligible to make contributions during that tax year 3. Calculates any excess contributions and required corrections 4. Sets up proper tracking for future qualified distributions Since Washington has no state tax implications, this is purely a federal documentation issue. The amendment should be straightforward - Form 1040-X with the missing Form 8889 attached. No change to your tax liability, just correcting the record. I'd strongly suggest having your accountant handle this amendment at no charge since it was their oversight. If they're reluctant, that raises questions about their competence for future filings.

Random question from an accountant's wife: has anyone here calculated if it's actually cheaper to pay a Canadian accountant and a US accountant separately, or find one of those specialized cross-border accountants that do both returns?

As someone who's been navigating dual US-Canadian taxation for about 3 years now, I can confirm that while it's complex, it's definitely manageable once you understand the basics. A few key points that might help: 1. You'll almost certainly end up paying less in total taxes than you think. Canadian taxes are generally higher, so the foreign tax credits usually eliminate most US federal tax liability. 2. Don't forget about provincial taxes in Canada - they vary significantly by province and aren't covered under the treaty the same way federal taxes are. 3. If your employer offers stock options or RSUs, get professional advice ASAP. The timing of taxation between the two countries can create some really tricky situations. 4. Consider opening your Canadian accounts before you actually move - some banks are more willing to work with US persons if you establish the relationship while still in the US. The first year is definitely the hardest as you figure everything out, but it gets much more routine after that. Just budget for good professional help at least for the first filing to make sure you're set up correctly!

Make sure to check if you get an escrow refund when you pay off your mortgage! When I paid mine off, they had collected extra money in my escrow account for future property taxes, and they sent me a refund check about 3 weeks later. This refund is NOT taxable income, but it can complicate your property tax deduction. If part of that refund was for property taxes they collected but hadn't paid yet, you can only deduct property taxes actually paid during the year (either by you or your mortgage company). I made the mistake of deducting the full year's property taxes when part of it was actually refunded to me in that escrow refund. My accountant caught it, thankfully, but it's something to watch out for.

One thing to keep in mind is timing - if you're planning to pay off your mortgage this year, consider the timing strategically for tax purposes. If you pay off in early 2025 before your July property tax payment, you'll be responsible for both property tax payments directly, which means more paperwork but also ensures you have clear documentation for everything you paid. Also, don't forget to save ALL your closing documents when you pay off the mortgage. Your final settlement statement will show any property tax prorations, escrow account balances, and other details that might affect your tax filing. I learned this the hard way when I needed to reference mine months later and had to dig through a pile of paperwork! Your mortgage company should provide you with a final escrow statement showing exactly what property taxes they paid on your behalf during 2025, which will match what appears on your 1098. This makes it easier to reconcile everything when tax time comes.