Quick question for anyone with experience - if my side gig is seasonal (I make handcrafted items that sell mostly around holidays), can I still do the solo 401k thing? Like 80% of my side income comes in November and December, but I work my regular job year-round.

This is such a great discussion! I'm in a similar boat with my freelance web design work alongside my day job. One thing I wanted to add that hasn't been mentioned yet - make sure to consider the administrative burden of maintaining a solo 401k. While the tax benefits are fantastic (I saved about $3,200 in taxes last year), you do need to keep detailed records of your business income and expenses. I use QuickBooks to track everything, which makes it much easier when it's time to calculate my contribution limits. Also, if you're thinking about expanding your side business in the future, the solo 401k becomes even more valuable. As your self-employment income grows, that 25% employer contribution can really add up. Last year I was able to put away an extra $6,800 beyond my regular 401k limits! Just make sure you're treating your LLC seriously as a business - the IRS can get picky if it looks more like a hobby. Keep good records and try to show you're operating with a profit motive.

This is a bit off topic but have you considered just getting married? My partner and I were in this exact situation with kids, HOH status, and Obamacare headaches. Getting married simplified everything tax-wise for us. I know marriage is a huge decision for many other reasons, but just from a purely practical/financial perspective, it solved our tax/healthcare coordination issues. We actually save money now because we file jointly and still qualify for premium tax credits.

As a tax professional, I want to emphasize that this situation requires very careful planning to avoid potential issues with both the IRS and the Health Insurance Marketplace. Here's what you need to know: The ACA subsidies are reconciled on your tax return through Form 8962. If your girlfriend received advance premium tax credits for both children but doesn't claim them as dependents, she'll likely owe back a significant portion of those subsidies - potentially thousands of dollars. For Head of Household status, you CAN potentially qualify even if you don't claim the children as dependents, but only if you have another qualifying person (like a parent you support). Simply paying household expenses while living with your girlfriend doesn't automatically qualify you for HOH if you can't claim a dependent. My recommendation: Calculate the total financial impact of both scenarios. Compare the tax savings from you filing HOH and claiming dependents against the cost of losing ACA subsidies and finding alternative health insurance. Often, keeping the ACA coverage is more valuable than the tax benefits. Also consider timing - you might be able to adjust the marketplace application during the next open enrollment period to reflect whoever will be claiming the children, which could help avoid subsidy repayment issues. I'd strongly suggest consulting with both a tax professional and a certified application counselor who understands ACA rules before making any changes.

Has anyone ever successfully fought a fringe benefit tax? My company is taxing us for the free lunches they provide in the office which seems ridiculous since I'm basically working through lunch anyway.

I see a lot of great explanations here, but I wanted to add one more possibility that might help explain your situation. Sometimes employers will have a "true-up" or catch-up process for fringe benefits that happens at year-end or after annual enrollment periods. For example, if you enrolled in benefits mid-year, or if there was an error in how your benefits were being calculated throughout the year, your employer might need to correct the tax withholding with a one-time adjustment. This could explain why you're seeing it as a single deduction rather than ongoing monthly taxes. I'd definitely recommend checking with your HR department about the specific benefit this relates to, and ask them to provide documentation showing how the taxable amount was calculated. They should be able to give you a clear breakdown - it's not something you should have to guess about on your paycheck. Also worth noting that if this is related to a significant fringe benefit (like a large life insurance policy or company car), make sure you're prepared for it to potentially show up on your W-2 as additional income when tax season comes around.

It might be worth checking if your state tax agency has any verification requirements too. Sometimes the ID.me notification could possibly be related to state taxes rather than federal. I had a client who was confused about a similar situation, and it turned out the verification was for their state return, not the federal one. You might want to check both your federal and state tax account portals to see if there are any notices or requirements listed there.

I went through something similar recently! The ID.me notification can definitely appear before you receive the physical letter from the IRS. In my case, I got the notification about 10 days before the 5071C letter arrived in the mail. Here's what I learned from my experience: - Don't try to go to the IRS office without the letter - they literally cannot help you without the reference number - The letter will tell you exactly which documents to bring and give you the specific verification code needed - You can check your IRS online account at irs.gov to see if there are any notices posted there first Since you work remotely and have flexibility, I'd suggest checking your online account daily and being patient for the letter. Once you get it, scheduling the appointment is usually pretty straightforward. My verification took about 20 minutes in person, and my refund was released within a week after that. The anxiety is totally understandable - I was stressed about it too! But the process is actually pretty smooth once you have the proper documentation.

I had some confusion with Form 4952 last year. Anyone know if tax software like TurboTax or H&R Block can handle this form correctly, especially the carryover calculations across multiple years?

This is a complex situation that many investors face when they discover investment interest deductions later. Let me add a few practical points that might help: First, before spending time and money on amendments, calculate whether the deductions would actually benefit you in those prior years. If you took the standard deduction and your total itemized deductions (including the investment interest) wouldn't exceed the standard deduction for those years, amendments won't help. Second, keep in mind that investment interest expense is subject to the 2% AGI threshold if you're dealing with years before 2018, which adds another layer of complexity to whether amendments are worthwhile. For your current year planning, since you're expecting substantial capital gains, consider the timing of your stock sales. You might benefit from spreading sales across tax years to optimize your investment income and better utilize any carried-forward deductions you can establish. Also, don't forget that investment interest expense includes more than just margin interest - it can include interest on loans used to purchase investment property, points paid on investment property loans, and other investment-related borrowing costs. Make sure you're capturing all eligible expenses in your calculations. The key takeaway is to start filing Form 4952 this year regardless of your prior year situation, so you don't face this documentation gap again in the future.