I've been following this thread as someone who went through a very similar situation as a freelance esthetician. One thing that really helped me was keeping a detailed business calendar alongside my expense tracking. I'd note things like "purchased new nail files and cuticle nippers - $45" or "completed continuing education course on gel applications - $150" right in my phone calendar. This became incredibly valuable because it showed the business purpose and timing of each expense. When I eventually filed my Schedule C, I had a clear timeline of my professional development and supply purchases that directly related to my income. Another tip: if you do decide to address the worker classification issue with your boss, consider framing it around the risks to THEIR business. Misclassification can result in significant penalties for employers - they could owe back taxes, penalties, and interest for all the payroll taxes they should have been paying. Sometimes approaching it as "I want to help protect the business" rather than "you're doing something wrong" gets better results. The quarterly tax payment advice above is absolutely crucial. I use a simple formula: every time I get paid, I immediately move 30% to a separate savings account labeled "taxes." It's automated through my bank so I never have to think about it. Come quarterly payment time, the money is already there waiting.

As a tax professional who specializes in self-employment issues, I want to emphasize something that's been touched on but bears repeating: the IRS has very specific criteria for what constitutes an independent contractor versus an employee, and your situation has several red flags for misclassification. The three main factors the IRS considers are: 1) Behavioral control (do they control how you do your work?), 2) Financial control (do you have unreimbursed business expenses, opportunity for profit/loss?), and 3) Relationship type (do you have employee benefits, is this an ongoing relationship?). Based on your description - showing up to their salon, working set hours, using their equipment - you sound like an employee. The fact that you "don't feel like you're running your own business" is actually a key indicator. Here's my advice: Start documenting everything NOW. Keep records of your work schedule, what equipment/supplies you provide versus what the salon provides, whether you can set your own rates, if you can refuse certain clients, etc. This documentation will be crucial whether you decide to file Form SS-8 for a determination or if the IRS ever audits your employment status. In the meantime, if you're filing as 1099, be conservative with deductions. Focus on supplies you personally purchase, professional licenses, liability insurance, and continuing education. Avoid gray areas like meals and transportation unless you have clear business purposes documented. Remember, getting properly classified as an employee might actually save you money even without the deductions, since your employer would pay half your Social Security and Medicare taxes.

Just want to point out that the IRS is actually super backlogged right now. My friend had a similar excess contribution issue from 2022 and didn't get an IRS notice about additional penalties until January 2025 - almost 3 years later! So just because you haven't received a notice doesn't mean you're in the clear. The interest keeps accumulating the whole time, even if they're slow sending the notice. Better to be proactive like you're doing!

I went through something very similar last year and can offer some perspective on the timeline and what to expect. First, yes, you likely do owe additional penalties beyond the $390 excise tax. The failure-to-file penalty for Form 5329 is typically 5% of the unpaid tax per month (up to 25%), and failure-to-pay is 0.5% per month (up to 25%), plus interest compounding daily. For your situation, filing almost 2 years late, you're probably looking at the maximum penalties plus accumulated interest. In my case, a similar delay resulted in about $180 in additional penalties and interest on top of the base excise tax. Regarding the IRS notice - don't count on getting one anytime soon. The IRS is massively backlogged, and many people are waiting 2-3 years for notices on issues like this. The interest keeps accumulating whether they send you a notice or not. My recommendation: Call the IRS directly (or use a service to get through faster) to get the exact amount you owe. Once you have that number, pay it immediately to stop further interest accumulation. You can also explore the reasonable cause exception if this was truly an honest mistake - the IRS sometimes waives additional penalties for first-time errors when you demonstrate good faith efforts to correct the situation. The key is being proactive rather than waiting for them to contact you, which may never happen or could take years.

This is exactly the kind of situation where having a good relationship with your CPA becomes crucial. I went through something similar last year and learned that most experienced tax professionals have templates and procedures specifically for trust short-year returns. One approach that worked well for me was to schedule a planning meeting with the CPA about 60 days before the intended termination date. We created a detailed timeline that included: requesting preliminary statements from all financial institutions, identifying any potential late-arriving income sources (like partnership K-1s), and calculating estimated tax reserves. The key insight my CPA shared was that the IRS is generally reasonable about good-faith estimates on short-year returns, especially for trusts. As long as you document your methodology and show that you made reasonable efforts to capture all income, minor discrepancies usually aren't problematic. Also consider the timing of your termination date strategically - if you terminate right before a major dividend payment date, you might avoid having to estimate that income entirely. My CPA helped me identify the optimal termination timing based on the trust's specific investment holdings.

As someone who recently went through this exact process, I can't stress enough how important it is to start gathering your preliminary financial statements early. I made the mistake of waiting until the last minute and discovered that one of our brokerage firms needed 10 business days to generate the year-to-date report. Here's what I wish I had known earlier: create a comprehensive asset inventory first, then systematically contact each institution about 6-8 weeks before your planned termination date. For investment accounts, ask specifically for "income and realized gains/losses through [termination date]" rather than just a general statement - this ensures you get the tax-relevant information. Also, don't forget about any automatic reinvestment plans (DRIPs) that might generate small amounts of additional income right up until termination. These often get overlooked but can affect your final tax calculations. One last tip - if your trust has any money market accounts or CDs that will mature after your planned termination date, factor in that accrued interest when calculating your reserves. The preliminary statements often don't capture interest that's earned but not yet paid, which can create surprises later.

Just want to add something important that others haven't mentioned - when calculating the financial impact of moving closer to work, don't forget to factor in your TIME value! I moved from a 45 min commute to a 10 min commute last year, and even though my housing costs went up by about $400/month, I got back 11-12 hours of my life every week! That's like gaining a part-time job's worth of hours. I calculated my hourly rate at work ($34/hr) and multiplied by the hours saved, and realized I was "earning" about $1,500/month in time value alone. Plus the stress reduction and extra family time are honestly priceless. Just something else to consider beyond the pure vehicle costs!

Great question about the mileage calculation! I've been through this exact analysis myself. One thing that might help clarify your thinking - the IRS standard mileage rate isn't really meant for personal financial decisions like yours. It's designed as a simplified tax deduction method that covers "average" vehicle costs. For your moving decision, I'd recommend creating your own cost-per-mile calculation specific to your Jeep. Here's what worked for me: **Fixed costs per mile:** Take your annual insurance, registration, and depreciation, divide by total miles driven per year. **Variable costs per mile:** Track your actual fuel, maintenance, and repairs over several months, then calculate the per-mile rate. With your Jeep's 15 MPG, your fuel costs alone are probably around 20-25 cents per mile (depending on gas prices), compared to maybe 15 cents for the "average" vehicle the IRS uses. I ended up finding that my actual vehicle costs were about 15% higher than the IRS rate, which significantly impacted my cost-benefit analysis for relocating. The key is using YOUR vehicle's real numbers rather than the government's average. Don't forget to factor in the non-financial benefits too - shorter commute time has real value!

I got hit with a huge supplemental bill last year. Anyone know if there's a way to challenge it if you think the new assessment is too high? My bill seems insane compared to similar houses in my neighborhood.

Great question! I went through this same confusion when I bought my home two years ago. To add to what others have said, one important thing to keep in mind is timing - if you're close to the standard deduction threshold, that supplemental property tax bill might be what tips you into itemizing territory, making it worthwhile. Also, don't forget to save all your property tax payment records (including the supplemental bill) for your files. I learned the hard way that you'll want these not just for this year's taxes, but potentially for future reference if you ever get audited or need to prove payments for other purposes. One more tip: if your mortgage company handles your property taxes through escrow, make sure they're aware of the supplemental bill. Sometimes they don't automatically adjust your escrow account for these, and you could end up with a shortage later.