I've been in a similar situation with my neighborhood book club where we pool money for venue rentals and refreshments. One thing that's helped me is creating a simple "pass-through fund agreement" that all participants sign at the beginning of each season. The agreement states that I'm acting solely as a collection agent, that all funds belong collectively to the group, and that I receive no personal benefit from handling the money. While this doesn't eliminate the need for good record-keeping, it creates a paper trail showing the intent and nature of the arrangement from the start. I also send a simple monthly summary to all participants showing total collected vs. total spent, which creates transparency and further documents that this isn't personal income. It takes maybe 10 minutes per month but gives everyone (including me) peace of mind about how the money is being handled.

Consider opening a business checking account specifically for the basketball group, even if you don't formally incorporate. Many banks offer simple business accounts that can be opened under a "doing business as" (DBA) name like "Saturday Basketball Group" without requiring formal business registration. The key advantage is that this account would have its own EIN (Employer Identification Number) rather than using your SSN, which helps separate the funds from your personal tax situation. You'd still need to maintain records showing all money collected equals all money paid out for court rental, but having a separate EIN creates clearer separation. Most banks will let you set up Zelle and other payment methods on the business account, so players can still pay electronically. The annual fees for a basic business checking account are usually minimal (often under $100/year) and could be worth it for the peace of mind and cleaner separation from your personal finances.

The key thing to remember is that the IRS calculates underpayment penalties on a quarter-by-quarter basis, not just your total for the year. So even if you're overpaid overall, you could still face penalties for specific quarters where you didn't meet the minimum requirements. However, there are some exceptions that might help in your situation. If your applied overpayment from last year is substantial enough, it might cover the required minimum for multiple quarters. The safe harbor rule generally requires you to pay 25% of your required annual amount each quarter (either 90% of current year tax or 100%/110% of prior year tax depending on your AGI). I'd recommend calculating exactly how much your Q1 payment plus the applied overpayment covers in terms of quarters. If it's enough to satisfy both Q1 and Q2 requirements under the safe harbor rules, you might be able to skip or reduce Q2. But don't just wing it - the underpayment penalty interest rate is currently pretty high, so it's worth doing the math properly. You might also want to consider making a smaller Q2 payment just to be safe, rather than skipping it entirely. Better to overpay slightly than deal with penalty notices later.

I went through this exact situation two years ago and can confirm what others have said - you absolutely can adjust your Q2 payment downward to account for being overpaid from Q1 plus your applied refund. The IRS doesn't require equal quarterly payments, just that you meet the minimum thresholds each quarter. One thing I'd add that hasn't been mentioned yet - make sure you keep really good records of all your payments and the applied overpayment amount. I recommend downloading your tax account transcript from the IRS website (you can get it instantly online) to verify that your applied overpayment is showing correctly in their system. Sometimes there can be delays in how these get processed. Also, when you do reduce your Q2 payment, I'd suggest making a note in your tax records about why you adjusted it. While you don't need to file any special forms, having documentation of your reasoning will be helpful if you ever need to explain it to the IRS or your tax preparer next year. The penalty avoidance math can definitely be tricky, so don't hesitate to use the tools others mentioned or consult with a tax professional if the numbers are substantial. A small consultation fee is usually worth it to avoid underpayment penalties, especially with how high the interest rates are right now.

Has anyone used H&R Block's expat tax service? I'm in a similar situation (US citizen in Auckland) and wondering if they're any good for international situations. Their regular service messed up my taxes before I left the States so I'm hesitant, but they advertise an expat specialty service.

I went through this exact same situation last year! The key thing to remember is that the US tax year mismatch with NZ isn't as complicated as it seems - you just report your NZ income earned during the US tax year (Jan-Dec 2023) on your US return. A couple of practical tips from my experience: 1. Keep detailed records of your income from both countries with dates - this makes everything easier 2. The Foreign Tax Credit can be really valuable, but you'll want to calculate whether that or the Foreign Earned Income Exclusion gives you better tax savings 3. Don't forget about potentially reporting any NZ bank accounts on your FBAR if the total exceeds $10,000 at any point during the year One thing I wish I'd known earlier - make sure you understand NZ's tax residency rules too. Since you qualify as a tax resident there, you'll need to report your US income on your NZ return as well. The timing can get tricky since you might file your US return in April but your NZ return isn't due until July. If you're comfortable with TurboTax, their Premier version handles foreign income reporting pretty well. Just make sure you have all your NZ pay slips converted to USD using the proper exchange rates for when you earned the income.

If ur charging so much below market wouldnt this rental be considered a hobby and not a business? I thought if u dont make profit for like 3 years the irs considers it a hobby and u cant take deductions??

Just to add another perspective - make sure you keep detailed records of all rental-related expenses even if you're charging below market rate. I rent to my sister at a reduced rate and learned the hard way that documentation is key. Keep receipts for your portion of utilities, any repairs or maintenance done to the rental space, insurance allocations, etc. Even if you can only deduct up to your rental income, having organized records will save you headaches if you ever get audited or need to reference something later. Also consider having a simple written rental agreement even with family - it helps establish that this is a legitimate rental arrangement rather than just casual help with expenses. The IRS likes to see that you're treating it as a real business relationship.

I've been dealing with the same 424 code for about 6 weeks now. From what I've researched, it usually means they're doing an income verification review - could be triggered by anything from a small discrepancy in your W2 reporting to just random selection. The waiting is the worst part honestly. I've seen people say it can take anywhere from 6-16 weeks to resolve. Have you tried calling the practitioner priority line? Sometimes they can give you a bit more info than the regular customer service line.

Ugh, I feel your pain! I'm dealing with the exact same thing - got the 424 code about 3 weeks ago and it's been radio silence since then. From what I've gathered from this thread and other research, it seems like they're just verifying some info on our returns. Super frustrating that they can just hold our money with basically no communication though 😤 At least it sounds like they do pay interest while we wait, which is something I guess? Definitely gonna look into that taxr.ai thing people are mentioning - anything beats calling the IRS and waiting on hold forever just to get a generic "your return is being processed" response 🙄