Has anyone used a tax professional specifically for this? I tried asking my regular accountant and she seemed really uncertain about how to implement this correctly, which doesn't give me much confidence.

This is exactly the kind of question I had when I started my LLC! One thing I learned the hard way is that you absolutely need to establish legitimate job duties and pay rates BEFORE you start paying them. The IRS looks for whether this is a real employment relationship or just a way to shift income to your kids. I recommend creating written job descriptions that match what they're actually doing, setting up regular work schedules (even if it's just a few hours after school), and paying them consistently - not just random amounts when you feel like it. The phone answering and filing work you mentioned is perfect because it's clearly legitimate business tasks. Also, make sure you're familiar with child labor laws in your state. Most states have restrictions on how many hours minors can work during school periods, and you want to stay within those limits even though they're your own kids. The payroll vs. 1099 question is important - definitely go with payroll as others have mentioned. Your children working under your supervision in your business are employees, not independent contractors.

Thanks everyone for the detailed responses! This is incredibly helpful. I've been stressing about this since the sale went through in January. Based on what you've all shared, it sounds like I have two main options: 1. Split the payments equally across four quarters (~$65k each for federal, plus the Washington state portion) 2. Use the annualized income installment method since all my gains happened in Q1 I'm leaning toward the annualized method since it seems more accurate for my situation, but I'm definitely going to keep detailed documentation as @StarGazer101 mentioned. One follow-up question - for the Washington state capital gains tax that @Yara mentioned ($73,500 on the amount over $250k), do they follow the same quarterly schedule as federal? And can I use the annualized method for state taxes too? Also going to check out both taxr.ai and potentially use Claimyr to get official IRS confirmation. With amounts this large, I'd rather be 100% certain I'm doing everything correctly. Better safe than sorry!

Welcome to the community! Just wanted to add another perspective as someone who went through a similar large capital gains situation. One thing that really helped me was setting up a separate savings account specifically for the tax payments and transferring the estimated amounts immediately after the sale. With $1.3M in gains, you're looking at roughly $260k federal + $73.5k Washington state = ~$333k total. Having that money physically separated from my regular accounts prevented any temptation to spend it and gave me peace of mind. Also, since you mentioned this is your only income for 2025 during your sabbatical, make sure you're not missing any deductions you might be eligible for. Things like investment advisory fees, safe deposit box fees, or other investment-related expenses might help reduce your taxable gains slightly. The annualized method definitely sounds right for your Q1 sale situation. Just remember that even though it's more complex, it can save you from having large amounts tied up in overpayments to the government throughout the year. Good luck with everything!

I just want to echo what others have said - you're definitely not alone in this confusion! The W-4 changes really threw a lot of people off, and it sounds like your situation is textbook for what happened to many folks. One thing I'd add that I don't think anyone mentioned yet - when you do fill out that new W-4, make sure to use the IRS withholding calculator on their website (irs.gov) if you want to get really precise. It takes into account your specific pay frequency, current withholding amounts, and will tell you exactly what to put on the form. I used it last year after having a similar issue and it was spot-on. Way better than just guessing at how much extra to withhold. Plus it walks you through each step of the new W-4 format, which honestly still confuses me compared to the old allowances system. The fact that you went from getting $2,300 back to owing small amounts actually shows the system is working better for you now - you're just getting your money throughout the year instead of giving the government a free loan. A small adjustment should get you right where you want to be!

I'm glad to see so many helpful responses here! Just wanted to add one more perspective as someone who works in payroll. The transition from the old allowance-based W-4 to the new system has been a nightmare for both employees and employers. Many payroll systems had to be completely updated, and some companies are still working out the kinks years later. What you're experiencing is super common - the old "claim 0" strategy doesn't translate directly to the new system. The new W-4 tries to be more accurate by having you enter actual dollar amounts rather than allowances, but it requires you to be more hands-on with the calculations. A couple of practical tips: - When you fill out your new W-4, don't just leave everything blank thinking it's the same as claiming 0 - If you're single with one job and no dependents, you might actually want to check the box in Step 2(c) for "single or married filing separately" jobs - And definitely add that extra withholding amount others mentioned - even $10-15 per paycheck should solve your problem The good news is once you get it figured out with the new system, it should be much more accurate going forward. The old system was really just a rough estimate, but the new one can be more precise if you take the time to fill it out properly.

As someone who's dealt with both traditional banks and online banking for tax refunds, I'd say your preparation approach is spot-on. The fact that you're planning 45 days ahead and triple-checking your account details shows good financial discipline. From what I've observed in this community, Chime generally performs well for tax refunds with the added benefit of faster processing times compared to traditional banks. Since you're military and have that June PCS date looming, I'd suggest filing as early as possible once you receive your W-2s to avoid any potential complications during your move. Also, consider setting up email and text notifications in your Chime app so you'll be immediately alerted when the deposit hits - this can be especially helpful if you're dealing with the chaos of military relocation. The transition from USAA to Chime for government payments should be seamless, but having that buffer time before your move will give you peace of mind.

I've been using Chime for tax refunds since 2021 and it's been solid every year. The key thing that helped me was actually calling Chime's customer service (855-754-4637) before my first tax season to confirm they accept government deposits - they do, and they were pretty helpful about walking me through their process. Since you're coming from USAA, you'll probably appreciate that Chime doesn't put the typical 1-3 day hold on government deposits that some banks do. I usually get my refund on a Thursday or Friday when the IRS says Monday. One military-specific tip since you're PCSing in June - make sure you update your address with the IRS using Form 8822 if you move before your refund processes, even if you're using direct deposit. I learned this the hard way when they sent me a notice to my old address and it took weeks to sort out. Your triple-checking approach is smart - I do the same thing and screenshot my direct deposit info from the app as backup documentation.

Has anyone actually gotten audited for donation deductions? I've been paranoid about claiming some furniture I donated last year (worth about $3,000) because I only have a vague receipt from the charity. I've heard the IRS is especially picky about non-cash donations.

Great question! Since you're dealing with $6,500 in donations, you'll definitely want to compare itemizing vs. standard deduction. The key is adding up ALL your potential itemized deductions - not just charitable contributions. This includes mortgage interest, state/local taxes (capped at $10k), medical expenses over 7.5% of your income, and your $6,500 in donations. For your donations, make sure you have proper documentation: bank records or receipts for cash donations, and written acknowledgments from charities for any single donation over $250. For your Goodwill donations, those absolutely count as charitable deductions! You'll need to determine fair market value (what someone would reasonably pay for the items in their used condition). Keep photos and detailed lists of donated items. One important note: if your total non-cash donations exceed $500, you'll need to file Form 8283 along with Schedule A. Also, be aware that charitable deductions are generally limited to 60% of your adjusted gross income for cash donations and 50% for non-cash donations, though this likely won't affect you at $6,500. The IRS provides valuation guides for common donated items on their website, which can help you properly value your clothing and household goods. Good record-keeping is essential - the IRS does scrutinize charitable deductions more closely than some other deductions.