Have you considered the potential penalties you might face? I just went through something similar and ended up owing about 20% on top of the additional taxes, plus interest dating back to the original filing deadline for each year.

This is a serious situation that unfortunately happens more often than people realize. As someone who works in tax compliance, I've seen cases where preparers inflate deductions thinking they're "helping" clients, but they're actually putting them at significant risk. Your instinct to be concerned is absolutely correct. The fact that you have such large discrepancies ($2,700 vs $800 and $13K vs $3K) suggests this wasn't just aggressive but legitimate tax planning - these sound like fabricated deductions. Here's what I'd recommend: First, document everything. Gather all your actual business expense records for those years so you have concrete evidence of what your real expenses were. Then have that conversation with the CPA - ask specifically what documentation they used for each major deduction category. Their response will tell you everything you need to know about whether this was intentional. If they can't provide reasonable explanations or documentation, you should absolutely file amended returns. Yes, you'll owe additional taxes plus interest, but voluntary correction shows good faith and typically avoids fraud penalties. The alternative - waiting and hoping you don't get audited - is much riskier. The IRS takes a dim view of preparers who fabricate deductions, and if this was intentional, other clients are likely affected too. After you get your own situation sorted, consider whether reporting is appropriate.

I completely understand your stress about this situation! As others have mentioned, you definitely need to report all W-2s - the IRS already has copies from the employers so leaving one out will cause bigger problems down the road. The good news is there are several strategies that might help reduce what you owe. First, double-check that you're claiming all available credits - things like the Earned Income Tax Credit, Child Tax Credit (if you have kids), or education credits if either of you took classes. You mentioned this is your first year filing married - make sure you're using the right filing status. Sometimes "Married Filing Separately" can be better than "Married Filing Jointly" depending on your income levels, though usually joint is better. Also consider making a traditional IRA contribution before the tax deadline - you can still contribute for the previous tax year and it directly reduces your taxable income. Even a small contribution might help bridge the gap between owing and breaking even. Don't panic! Owing $787 isn't the end of the world, and the IRS offers payment plans if you can't pay it all at once. Focus on making sure your withholdings are adjusted going forward so this doesn't happen again next year.

I feel your pain on this - my wife and I went through almost the exact same thing our first year married! The shock of going from expecting a refund to owing money is really tough. One thing that helped us was checking if we qualified for the Earned Income Tax Credit (EITC). With multiple lower-paying jobs, you might be right in that sweet spot where it applies. Also, if you're under 25 and don't have kids, there's a smaller EITC for childless workers that many people don't know about. Another suggestion - look into whether you can still contribute to traditional IRAs for last year. Even if your husband's part-time jobs don't offer retirement plans, you can usually still make IRA contributions that reduce your taxable income dollar-for-dollar. If you can swing even a $1,000 contribution, that could save you $100-200 in taxes depending on your bracket. The silver lining is that you've learned this lesson early in your marriage! Going forward, you can adjust withholdings or make quarterly payments to avoid this surprise. We now have extra taxes withheld from my main job to cover my husband's freelance work, and it's made tax time much less stressful. Hang in there - you'll get through this! 💪

Does anyone know if there's a good tax software that makes calculating these estimated payments easier? I've been using TurboTax but it doesn't seem to have a good way to project for the upcoming year or help me figure out these quarterly amounts.

I've been dealing with estimated taxes for years as a small business owner, and I think there's another important point that hasn't been mentioned yet. The IRS actually gives you some flexibility with the safe harbor rules that can make this whole process less stressful. If you pay either 90% of this year's tax liability OR 100% of last year's tax liability (110% if your AGI was over $150,000) through withholding and estimated payments, you won't face underpayment penalties - even if you end up owing more when you file. This means you can use last year's tax return as a baseline for your quarterly payments, which is especially helpful if your income varies significantly. For the uneven quarterly periods, I've found it easier to just set up automatic payments for the same amount each quarter based on last year's taxes. It's not perfectly optimized, but it keeps me safe from penalties and I can adjust when I file my return. Sometimes the peace of mind is worth paying a little extra during the year.

I'm still confused about this... if my W-2 shows $50,000 in Box 1 (Wages, tips, other compensation), does that include the employer portion of FICA taxes or not?

This is such a great question and the responses here have been really helpful! I just wanted to add one more perspective as someone who recently made the transition from employee to contractor. When I was an employee making $65,000, I thought that was my "cost" to the company. But when I went freelance and started negotiating my contractor rate, I had to factor in that I'd now be paying the full 15.3% self-employment tax instead of just the 7.65% employee portion. Plus I lost other benefits like health insurance contributions and 401k matching. I ended up setting my hourly rate significantly higher to account for these additional costs. It really opened my eyes to how much employers actually invest in each employee beyond just the salary. The 7.65% employer FICA contribution is just the tip of the iceberg when you consider unemployment insurance, workers comp, benefits, etc. For anyone considering going freelance - make sure you factor in that you'll be paying both the employee AND employer portions of Social Security/Medicare taxes!

Has anyone dealt with Section 754 elections when a partnership interest changes hands? We did a family buyout last year and our accountant mentioned it but I'm still confused how it works.

Great discussion everyone! Just wanted to add one more consideration that might be relevant - timing of the sale within the tax year can matter quite a bit. If your friend sells early in the partnership's tax year, he'll have a shorter period of K-1 income to deal with, but the family members will have their increased ownership percentages for most of the year. Also, make sure they consider whether the partnership needs to file an amended partnership agreement or operating agreement to reflect the new ownership structure. While this isn't directly a tax form, having the legal documentation updated will make future tax filings much cleaner and help avoid any questions from the IRS about ownership percentages on future K-1s. The partnership should also notify their tax preparer about the ownership change as soon as it happens so they can properly allocate income and expenses for the partial year periods on everyone's K-1s.