I went through something very similar with my grandmother last year. The key thing that tripped me up was understanding that ANY money you give her counts as income, even if it's just a "thank you" or help with expenses. What ended up working for us was keeping the cash payments under $93/week (which keeps her under the $4,850 annual limit for 2025) and then covering more of her direct expenses instead. So instead of giving her extra cash, we started paying for things like her prescriptions, clothing, personal care items, and even set up a small monthly allowance on a prepaid card for incidentals. We were able to claim her as a dependent and got a nice tax break. The documentation was key though - we kept receipts for everything we paid for her to prove we provided more than half her support. It's definitely worth restructuring if you can make the numbers work!

Based on what everyone's saying about the income limits, it sounds like your current arrangement unfortunately disqualifies your mother-in-law from being claimed as a dependent. At $135/week ($7,020 annually), she's well over the $4,850 limit for 2025. However, I'd strongly recommend consulting with a tax professional about your specific situation before making any changes. There might be nuances to your arrangement that could affect how the payments are classified, and you want to make sure any restructuring is done properly to avoid issues down the road. If you do decide to restructure, the suggestions about keeping cash payments under $93/week and covering direct expenses instead seem like a solid approach. Just make sure to document everything carefully - the IRS will want to see proof that you're providing more than half her total support if you claim her as a dependent. Also, don't forget to consider the childcare angle that Benjamin mentioned. Even if you can't claim her as a dependent, there might be other tax benefits available for the childcare services she provides.

One thing nobody mentioned yet - when you're liquidating an S-Corp, check if your state requires a tax clearance certificate before you can formally dissolve the business. I completely missed this step and had to reopen my case with the state after I thought everything was finished. The balance sheet issues in TurboTax might be frustrating, but don't forget about the state-level requirements too. In my state, I couldn't formally dissolve until I got clearance showing all state taxes were paid, and that process took almost 3 months!

Great point about state requirements! I'm actually going through S-Corp liquidation right now and almost made the same mistake. For the balance sheet issue in TurboTax, one thing that helped me was creating a simple spreadsheet to track all my liquidation transactions before entering them into the software. I listed: - Beginning balances for all accounts - Each distribution with the corresponding reduction in both cash and equity - Asset disposals with any gain/loss calculations - Final balances (should all be zero) This helped me see exactly where the imbalance was before fighting with TurboTax. In my case, I had forgotten to record the accumulated depreciation removal when I disposed of some equipment. Also, make sure you're using the correct tax year dates. Since you're liquidating, some transactions might span multiple tax years, and TurboTax needs to know which year each transaction belongs to for proper reporting. The taxr.ai tool mentioned above sounds interesting - might be worth trying if you're still stuck after manually checking your entries.

Just want to echo what others have said about selecting HOH on your W-4 - you absolutely should since you qualify! I made this switch last year and saw an immediate difference in my take-home pay. One additional tip I haven't seen mentioned: make sure to keep documentation that proves your kids lived with you for more than half the year. This includes school enrollment records, medical records showing your address, any custody agreements, etc. I know it seems obvious since you have full custody, but it's good to have this stuff organized just in case. Also, don't forget that as HOH with two kids, you'll likely qualify for the Child Tax Credit and possibly the Earned Income Tax Credit too, depending on your exact income. These credits can be worth thousands, so it's definitely worth getting your withholding right to avoid a big tax bill or giving the government an interest-free loan. The fact that you're thinking about this proactively with your new job shows you're on the right track. So many people just fill out the W-4 once and never revisit it, even when their life situation changes dramatically!

This is such a helpful thread! I'm a single parent too (one kid, age 10) and I've been making the same mistake for years - selecting Single on my W-4 even though I file HOH on my tax return. Reading through all these responses, I'm realizing I've probably been giving the government way too much money throughout the year and then getting it back as a "refund." That's basically what everyone is saying, right? That if you qualify for HOH when filing, you should select HOH for withholding too so you get more money in each paycheck instead of waiting for a big refund? I'm definitely going to update my W-4 this week. My situation is pretty straightforward - I have full custody, pay all household expenses, and my daughter lives with me year-round. Sounds like I clearly qualify for HOH. Thanks to everyone who shared their experiences and tools - this thread probably just saved me hundreds of dollars in overwithholding for the rest of the year!

This is such valuable information! As someone who just started with Uber Eats last month, I had no idea about the self-employment tax kicking in at just $400. I've been assuming I'd be fine since I'm nowhere near the regular filing threshold. Quick question for the group - when you say "set aside 25-30%" for taxes, is that from gross earnings or after deducting expenses like mileage? I've been tracking my miles but wasn't sure if I should calculate my tax savings based on total earnings or what's left after the mileage deduction. Also, does anyone know if there's a grace period for first-time 1099 filers? Like, will the IRS be more lenient with penalties if you legitimately didn't know about the self-employment tax requirement?

Just wanted to add something that might help other newcomers like myself - the IRS also has a "First Time Penalty Abatement" (FTA) policy that can waive failure-to-file and failure-to-pay penalties for taxpayers who have been compliant in prior years OR have no prior filing history. Since you mentioned you've never filed before, you might qualify for this if you end up with penalties. You'd need to call the IRS (or use that Claimyr service others mentioned) to request it after you file your return. Also, don't forget that as a delivery driver, you can deduct more than just mileage - things like your phone data plan percentage used for work, insulated delivery bags, car maintenance related to delivery work, and even parking fees during deliveries can add up to significant savings. The key is keeping good records from the start. I wish someone had told me this when I began - it would have saved me a lot of stress and money!

As someone who works in retirement planning, I can't stress enough how right everyone here is about avoiding 401k withdrawals for tax debt. What many people don't realize is that there's actually a specific order of operations the IRS follows for collections, and retirement accounts are typically among the LAST assets they'll go after, not the first. The IRS will generally exhaust other collection methods first - bank levies, wage garnishments, property liens, etc. - before touching retirement accounts. This is because they recognize the importance of preserving people's retirement security. So when your 401k administrator said "no," they were protecting you from making a move that even the IRS wouldn't rush to make themselves. Here's another angle to consider: if you're struggling financially enough to consider raiding retirement savings, you might actually qualify for Currently Not Collectible (CNC) status with the IRS. This temporarily suspends collection activities if you can demonstrate that paying the tax debt would create genuine financial hardship. It's worth exploring alongside payment plan options. The math everyone has shared here is spot-on - between penalties, taxes, and lost growth, a 401k withdrawal typically costs 40-60% more than the actual debt amount. File those returns, explore payment plans and hardship programs, but whatever you do, keep that retirement money working for your future!

I'm dealing with a very similar situation - unfiled returns for 2021-2023 and estimated debt around $8k. Reading through everyone's experiences here has been a real eye-opener, especially seeing the actual math behind 401k withdrawals versus payment plans. What really convinced me was the long-term impact calculations people shared. The idea that withdrawing money from retirement could cost 40-60% more than the actual debt amount, plus decades of lost compound growth, makes it clear why every financial professional warns against this approach. I'm curious about the timing of penalty abatement requests - should I wait until I have all my returns filed and processed before requesting first-time penalty relief, or can I mention it when I initially contact the IRS about setting up a payment plan? I want to make sure I don't miss any opportunities to reduce the total amount owed. Thanks to everyone who shared their real experiences here. This thread has potentially saved me from making a catastrophic financial mistake that I would have regretted for the rest of my working life. Sometimes the community really comes through with exactly the advice you need to hear!