Does anyone know if it's normal to have a balance due if your employer was withholding taxes all year? I thought the whole point of withholding was to avoid owing at tax time?

Just to add another perspective - if you're dealing with multiple income sources like you mentioned (W-2, freelance, and investment income), it's really common to have a balance due situation. The withholding from your W-2 job only covers that specific income, but your freelance work and investment gains often don't have any taxes withheld at all. This is especially true if your freelance income was significant or if you had capital gains from investments. The IRS expects you to make quarterly estimated payments for this non-W-2 income throughout the year. If you didn't do that (which many people don't realize they need to), you'll likely see a balance due when you file. For next year, you might want to either increase your W-4 withholding at your main job to cover the additional income sources, or start making quarterly estimated payments. This will help you avoid that surprise balance due next April!

Connor, based on your numbers ($6,500 in sales), you'll definitely need to file taxes if your net profit exceeds $400. The key word here is "net" - so you'll subtract all your legitimate business expenses (materials, workspace costs, etc.) from that $6,500. Here's what you'll need to do: • File Schedule C (Profit or Loss from Business) with your Form 1040 • If your net profit is over $400, also file Schedule SE for self-employment tax • Keep meticulous records of ALL business expenses - they're your friend for reducing taxable income • Consider setting up a separate business bank account to make tracking easier going forward Don't worry about not being formally registered - the IRS considers you self-employed regardless of business structure. Start gathering those receipts now and consider using accounting software like QuickBooks or even a simple spreadsheet to track everything. Better to be over-prepared than caught off guard!

Connor, you've gotten great advice here! I just wanted to add one practical tip that helped me when I started my small business - consider opening a separate business checking account even if you're not formally incorporated. It makes tracking income and expenses SO much easier come tax time, and it shows the IRS you're treating this as a legitimate business rather than a hobby. Also, since you mentioned you made $6,500 in sales, don't forget to factor in the cost of goods sold (your materials) when calculating your net profit. If you spent $3,000 on supplies and materials, your net profit would be $3,500 (minus other business expenses like workspace costs). This is important because it's the net profit that determines whether you hit that $400 self-employment tax threshold. One last thing - start saving for next year's quarterly payments now! A good rule of thumb is to set aside 25-30% of your profit in a separate savings account. Trust me, your future self will thank you when those quarterly payments are due!

Ugh, this is so relatable! I'm dealing with the exact same thing right now - filed my IL return in January and it's been stuck on "processing" for over a month. Reading all these stories makes me feel a little better knowing it's not just me, but also terrified that I might be waiting until summer for my refund! 😅 The fact that their tracking system is completely useless is so frustrating. Like, how hard is it in 2025 to have systems that actually communicate with each other? At this point I'm just going to stop checking the status page and hope for a pleasant surprise in my bank account like you got. Thanks for sharing - at least now I know what to expect (or not expect) from Illinois!

This is such a relief to hear! I'm currently in week 7 of waiting for my Illinois refund and that stupid status page has been mocking me with "processing" this whole time. I was starting to think something went wrong with my return, but reading everyone's experiences here makes me realize this is just how Illinois operates - or doesn't operate, I guess! It's honestly wild that in 2025 we have to play this guessing game with our own money. The federal system isn't perfect but at least you get some idea of what's happening. Illinois seems to just throw your return into a black hole and maybe, if you're lucky, money appears in your account months later with zero explanation. I'm definitely going to stop obsessively checking that useless tracker and just wait for the surprise deposit. Thanks for posting this - saved me from going completely insane wondering if I did something wrong!

One thing nobody mentioned - if you're right against the deadline, consider doing an ACH transfer instead of a wire. With Schwab specifically (I have my solo 401k there too), they count the contribution based on when you initiate it, not when it settles. So even if it takes a couple days to process, as long as you start the transfer before the deadline, you're good. Just make sure to screenshot the confirmation page showing the date you initiated it, just in case there are ever any questions.

This thread has been incredibly helpful! I'm in a similar situation with my solo 401k at Fidelity. One additional point that might help others - if you're making the employer contribution after December 31st, make sure your business has enough cash flow recorded for that tax year to support the contribution amount. I learned this the hard way when the IRS questioned a large employer contribution I made in March that seemed disproportionate to my reported business income. Even though the timing was legal, I had to provide additional documentation showing the income was earned in the previous tax year but received later due to client payment delays. Also, for anyone using estimated tax payments, remember that making a large employer contribution in the following year might affect your quarterly payment calculations, so plan accordingly with your tax professional.

I went through something very similar when I switched jobs mid-year and my new employer somehow set up my withholding incorrectly. The good news is that with 2 kids under 10, you have some solid tax credits working in your favor. The Child Tax Credit alone could give you up to $4,000 ($2,000 per child), and depending on your income level, a significant portion of that can be refundable even if you paid zero in withholding. The Earned Income Tax Credit could also apply if your income falls within certain ranges - with 2 qualifying children, this can be worth thousands more. Your health issues might also qualify you to file as Head of Household, which has better tax brackets and a higher standard deduction. I'd definitely recommend running your numbers through some tax software to get a realistic picture, but don't panic - families with dependents often come out better than they expect, even with withholding issues.

The EITC income limits for 2023 (filing in 2024) with 2 qualifying children are pretty generous - you can earn up to about $50,594 if filing single or $56,844 if married filing jointly and still get some credit. The maximum EITC with 2 kids is $6,164, which phases out as your income increases. Combined with the Child Tax Credit, you could potentially see a substantial refund even with zero withholding. Just make sure your kids meet the qualifying child requirements (age, relationship, residency tests) and that they have valid Social Security Numbers. Also, definitely fix your W-4 going forward to avoid potential underpayment penalties next year. Your situation with health issues and being the primary caregiver for 2 young kids sounds like it would qualify you for Head of Household status, which would give you even better tax treatment.