Great questions! For high-yield savings accounts, I'd recommend looking at Marcus by Goldman Sachs, Ally Bank, or Capital One 360 - they typically offer competitive rates (currently around 4-5% APY) and are FDIC insured. Just make sure there are no withdrawal restrictions since you'll need access for tax payments. Regarding quarterly estimated taxes - this is really important! If you expect to owe $1,000 or more in taxes when you file, the IRS generally requires quarterly payments to avoid underpayment penalties. Since you're looking at a potential six-figure capital gain, you'll almost certainly hit that threshold. The safe harbor rule is key here: if you pay either 90% of this year's tax liability OR 100% of last year's total tax (110% if your prior year AGI was over $150k) through withholding and estimated payments, you avoid penalties. Since this gain will likely far exceed your normal tax liability, I'd strongly recommend making estimated payments. You'd want to make your first estimated payment for Q3 2024 by September 16th (since the sale hasn't happened yet), then Q4 by January 15th, 2025. Many people split it 50/50 between those two quarters, but you could also do it all in Q4 if the sale happens late in the year. Consider using Form 1040ES to calculate the amount, or better yet, consult with a tax professional who can run the numbers based on your complete financial picture.

For high-yield savings accounts, I'd recommend looking at Marcus by Goldman Sachs, Ally Bank, or Capital One 360 - they're all FDIC insured and currently offering rates around 4-5%. Marcus is particularly good for this since there are no minimum balance requirements and you can easily transfer money out when needed for tax payments. Regarding quarterly estimated taxes - since you normally just have W-2 income, you'll likely need to make estimated payments to avoid underpayment penalties. The IRS generally requires quarterly payments if you expect to owe $1,000 or more in tax beyond what's withheld from your regular job. With a capital gain of $120k-180k, you're definitely going to hit that threshold. The safe harbor rule might help you though - if you pay 100% of last year's total tax liability through withholding and estimated payments (110% if your prior year AGI was over $150k), you won't face penalties even if you end up owing more. You could increase your W-4 withholding at work for the rest of the year, or make quarterly estimated payments using Form 1040ES. I'd suggest calculating roughly what you'll owe (around 15-20% federal capital gains plus potential 3.8% NIIT plus state taxes if applicable) and either make a large estimated payment for Q4 or significantly increase your payroll withholding for the remaining months of the year. Don't wait until next April - the penalties for underpayment can add up!

Thanks for your insight from the payroll perspective! That makes me feel better. One quick follow-up - if I filled out a W-4 for that second job but never actually worked, would that still be in the system somewhere that the IRS could see?

A W-4 is just an internal document that employers use to calculate withholding. It isn't sent to the IRS, so there's no record of it in the IRS system. The IRS only receives information when income is actually paid to you and reported on forms like W-2s or 1099s. Even if you filled out all the new hire paperwork including I-9, direct deposit forms, and a W-4, if no wages were ever paid, the IRS has no visibility into that employment relationship. Your employer keeps those documents for their records, but nothing gets transmitted to the IRS without actual compensation being paid.

Smart move getting it in writing. Did you keep that documentation with your tax records? I'm wondering how long I should hang onto stuff like this.

Yes, I kept the email with my tax records for that year. The IRS generally recommends keeping tax records for at least 3 years after filing (or 2 years from when you paid the tax, whichever is later). For situations like this where there's potential confusion about employment status, I'd keep the documentation for the full 3 years just to be safe. It takes up virtually no space as a digital file, and having that employer confirmation could save you headaches if any questions ever come up during an audit.

Yes, the IRS allows electronic tip reporting systems as alternatives to the physical Form 4070. If your manager has approved your app, you should be fine as long as the app tracks all the necessary information (dates, amounts, establishment name, etc.) and you submit reports by the 10th of the following month. Just make sure you keep backups of what you submit. I've seen situations where servers thought they were reporting properly through an app but the data wasn't being properly recorded in the restaurant's system.

But what if my income this year will be way higher than last year? Last year I was a part-time student with minimal income. This year I'm expecting to make quite a bit more with freelancing.

That's actually where the safe harbor provision helps you! If your previous year's tax liability was small, you can use that amount as your safe harbor target and avoid penalties even if you end up making significantly more this year. For example, if you only owed $2,000 in taxes last year, you could make quarterly payments totaling $2,000 for this year ($500 each quarter), and you wouldn't face underpayment penalties even if you end up owing $10,000 when you file. You'd still need to pay the remaining $8,000 when you file your return, but without penalties for underpayment.

Is there a good app for tracking all these expenses? I'm terrible at keeping receipts.

For expense tracking, I've been using Receipt Bank (now called Dext) which lets you just snap photos of receipts with your phone. QuickBooks Self-Employed is another solid option - it automatically categorizes transactions and has a mileage tracker too. Since you're in video production like the original poster, don't forget you can also deduct things like: - Camera equipment rentals - Stock footage/music licenses - Travel expenses to client locations - Even a portion of your phone bill if you use it for business The key is being consistent about tracking everything from the start - it's so much easier than trying to reconstruct everything at tax time!

Most states follow federal filing status, but California is actually one of the exceptions in certain cases. If one spouse is a non-resident and has no California income, you might be able to file as married filing separately for CA even if you file jointly federally. Check out CA Form 540NR instructions - there's a specific section for this situation. You might save on state taxes this way while still getting federal benefits of MFJ.

Thanks for the tip about Form 540NR! I'll definitely look into that. Would make a huge difference if we can optimize both federal and state filings separately.