2 Make sure you keep ALL your receipts and documents! I did some independent contracting last year and got audited because I claimed a home office deduction without proper documentation. What a nightmare!

Great question! As a fellow independent contractor, I'd strongly recommend setting aside 25-30% of your gross income for taxes. This covers both federal income tax and the dreaded self-employment tax (15.3% for Social Security and Medicare). Since you're new to this, definitely look into making quarterly estimated tax payments if you expect to owe more than $1,000. The IRS penalties for underpayment can add up quickly! For deductions, you're in a great position as a swim instructor. Definitely track your mileage - use the standard mileage rate (currently around $0.67/mile for 2024). Keep a detailed log of every trip to clients' homes. Other deductions to consider: swim equipment, certifications, liability insurance, phone usage for scheduling, and even a portion of your internet if you use it for business communications. One tip: open a separate business checking account and credit card. It makes tracking expenses so much easier come tax time. Also consider getting a simple mileage tracking app - MileIQ or similar services can save you hours of manual record-keeping. Don't forget about the Qualified Business Income (QBI) deduction either - you might be able to deduct up to 20% of your business profit!

Just FYI, if you're adjusting your W4 for a non-resident spouse with an ITIN, don't forget about state tax withholding too! You mentioned owing state taxes last year while getting a federal refund. Each state has different forms and requirements for withholding adjustments. Some states use the federal W4 info, but many have their own forms. Make sure you're adjusting both federal AND state withholding.

Great question about W4 withholding with a non-resident spouse! I went through this exact situation last year when my husband had an ITIN while waiting for his green card. Your calculation of $126 per paycheck sounds reasonable, and yes, that amount would go on line 4(c) of your W4. The key thing to remember is that you're essentially covering the tax liability for both your income and your wife's cash income through your withholding. A few additional tips from my experience: 1. Keep meticulous records of your wife's cash income (sounds like you're already doing this with your spreadsheet) - you'll need quarterly totals for accurate tax planning. 2. Consider making estimated quarterly payments instead of (or in addition to) increased withholding. Sometimes this gives you more control, especially if your wife's income varies significantly. 3. Once you know your wife's total annual income, you can use the IRS withholding calculator mid-year to see if you need to adjust your W4 again. 4. When her green card comes through, her tax status won't change dramatically for withholding purposes, but definitely recalculate everything since you'll have more certainty about the full year's income by then. The fact that you got a federal refund but owed state taxes suggests your federal withholding might have been close to right, so your new calculation should help balance things out better for 2025!

Little tip from someone who's been there - don't forget you might owe STATE taxes too! My first year owing, I paid the federal balance but completely spaced on the state portion and got hit with penalties. Most tax software should tell you if you owe state taxes too, but it's easy to miss if you're focused on the federal part.

Just wanted to add another perspective here - I was in the exact same situation two months ago and was freaking out about it. The IRS account balance delay is super common during tax season because they're processing millions of returns. I ended up paying through the IRS Direct Pay system exactly as KylieRose suggested, and everything worked perfectly. The key thing is to make sure you select the right tax year (2024) and choose "Balance Due on Tax Return" as your payment reason. This helps them match it to your filed return even if it hasn't fully processed yet. One thing I wish someone had told me - if you're worried about the payment amount being wrong, you can actually call the IRS Practitioner Priority Service at 1-866-860-4259. It's technically for tax professionals, but they'll help individual taxpayers too if you explain your situation. Much shorter wait times than the regular taxpayer line. The bottom line is don't stress too much about the account not showing your balance yet - the payment system is designed to handle this exact scenario!

I really appreciate everyone sharing their experiences here. As someone who's been in a similar dark place, I want to emphasize something that might get lost in all the technical advice: you're being incredibly brave by facing this now. The guilt and fear around unfiled taxes can be paralyzing, especially when you're already dealing with grief and mental health struggles. But the IRS really is more interested in compliance than punishment, particularly when life circumstances were genuinely difficult. A few practical points from my experience helping others in similar situations: 1) Don't let perfect be the enemy of good. Even if you can't find every single document, file with what you have. You can always amend later if needed. 2) The statute of limitations works in your favor too - after 3 years, you can't claim refunds, but after 10 years (6 in some cases), they generally can't collect either. 3) Consider reaching out to a local VITA (Volunteer Income Tax Assistance) program or Low Income Taxpayer Clinic. Many offer free or low-cost help specifically for situations like yours. 4) Document your hardship circumstances. The IRS has provisions for reasonable cause that can reduce or eliminate penalties when taxpayers faced genuine hardship. You've already taken the hardest step by deciding to address this. The path forward exists, and you're going to get through it.

I want to echo what others have said about the IRS being more reasonable than most people expect. I work as a tax preparer and see situations like yours regularly - you're definitely not alone. One thing I'd add to the excellent advice already given: consider filing your most recent year (2024) first, even if it's just an estimate. This shows the IRS you're making a good faith effort to get current, which can help when negotiating penalties for the older years. Also, don't underestimate the Fresh Start program. The IRS expanded it significantly in recent years, and it offers more flexible payment options and penalty relief than many people realize. An Enrolled Agent can help you navigate whether you qualify for any of these provisions. For gathering documents, your local library often has free access to tax software that can help you print transcripts of past tax information if you've filed before. The IRS also has a "Get Transcript" service online that can show what they have on file for you. The most important thing is that you're addressing this now while you're in a more stable place mentally and financially. That timing will actually work in your favor when dealing with the IRS.

At your income level, you're entering territory where tax planning becomes as important as the income itself. Here are some additional strategies to consider beyond what others have mentioned: **Immediate high-impact moves:** - **Deferred compensation plans**: If your employers offer these, you can defer a portion of current income to future years when you might be in lower brackets - **Executive physical programs**: Many employers reimburse these as business expenses, converting what would be personal medical costs into pre-tax benefits - **Professional development**: Maximize any employer-sponsored education benefits, professional memberships, and conference attendance **Investment restructuring:** - **Municipal bonds**: At your bracket, tax-free munis might yield better after-tax returns than taxable bonds - **I Bonds**: While limited to $10K per person annually, these provide inflation protection with tax deferral options - **529 plan superfunding**: You can contribute 5 years' worth of gifts ($90K per beneficiary) immediately for children's education while removing assets from your estate **Timing strategies:** - **Bonus timing**: If you have any control over when bonuses are paid, spreading them across tax years can help - **RSU management**: If you have any equity compensation, careful timing of vesting and sales can optimize tax impact The key at your income level is working with a team - CPA, financial planner, and possibly an estate attorney. Look for firms that specialize in tech executives or high-income professionals rather than general practitioners. The strategies available to you are significantly more complex and valuable than standard advice. Your effective rate concern is valid, but remember you're building wealth at an accelerated pace that most people never achieve. Smart tax planning now sets you up for long-term financial independence.

As someone who went through a similar income shock (jumped from $200k to $650k when I moved into a senior tech role), I completely understand the tax panic you're experiencing. That effective rate calculation hits hard when you see those numbers! A few additional strategies that made a real difference for my situation: **Health Savings Account optimization**: If you're not already doing this, consider switching to a high-deductible health plan specifically to maximize HSA contributions. The triple tax advantage (deductible, tax-free growth, tax-free withdrawals for medical) is unbeatable at our income level. **Energy tax credits**: With recent legislation, there are substantial tax credits for solar installations, EV purchases, and home efficiency upgrades. A solar installation can often provide 30% federal tax credit plus local incentives. **Bunching itemized deductions**: Consider prepaying property taxes, making large charitable contributions, or accelerating medical expenses into alternating years to exceed the standard deduction threshold. **State tax planning**: If either of your employers allows remote work, establishing residency in a no-income-tax state could save 6-13% on state taxes alone - potentially $43k-$93k annually on your income. The most important advice: don't let tax anxiety drive you into questionable strategies. Audit risk increases significantly at your income level, so any aggressive positions need solid legal backing. Focus on legitimate, well-established strategies first. You're absolutely right about needing a specialized tax professional. Look for CPAs with "high net worth" or "executive compensation" specializations, not general practitioners.