I feel your pain - I went through the exact same nightmare with my spouse's withholding! The 2020 W-4 changes really threw everyone for a loop. Here's what finally worked for us after two years of getting it wrong: Don't rely solely on the IRS calculator - it's helpful but can miss nuances. Instead, look at your previous year's tax return and calculate roughly what your tax liability should be for this year based on your expected income. For a $40,000 salary with only $212 withheld, your spouse's W-4 is definitely treating them as if they have no other household income. Make sure you check the "Multiple Jobs or Spouse Works" box in Step 2(c), but more importantly, use the worksheet that comes with the W-4 form to calculate the additional amount needed in Step 4(c). As a quick fix for this year, I'd recommend having your spouse add at least $100-150 per paycheck in additional withholding on line 4(c) to catch up. You can always adjust it down later if it's too much. Better to get a refund than owe a huge amount plus penalties! The key is coordination - both spouses need to fill out their W-4s together, not separately.

I went through this exact same frustration last year! The new W-4 form is definitely confusing, but there's a simple way to check if your withholding is on track throughout the year. Here's what I learned from my tax preparer: For someone making $40K, you should generally have around $2,000-3,000 in federal taxes withheld annually (depending on your total household income and filing status). With only $212 withheld, you're way off target. The quickest fix is to calculate what you should have withheld by now this year, then figure out how much extra to withhold from remaining paychecks. For example, if it's halfway through the year and you should have had $1,000 withheld but only have $100, you need to catch up by withholding an extra $900 over your remaining paychecks. I'd also recommend checking your pay stub every month to make sure the withholding amount looks reasonable. Don't wait until tax time to discover the problem again! One more tip: If your spouse's employer uses an online payroll system, you might be able to submit a new W-4 electronically and see the changes on the very next paycheck. Much faster than waiting for HR to process paper forms.

Has anyone successfully used the sales tax deduction calculator in previous years? I'm wondering if it's worth the effort or if I should just stick with my state income tax deduction.

I'm in a similar boat with itemizing for the first time this year! The IRS usually updates their calculators around December/January, so it's totally normal that 2024 isn't available yet. For now, you can get a rough estimate by using last year's calculator and adjusting for any major purchases you made in 2024. Since you mentioned big purchases with your new house, don't forget that you can also deduct sales tax on things like furniture, appliances, and even your car if you bought one this year - just keep all those receipts! The key is to compare your estimated sales tax deduction against your state income tax amount when you're ready to file. Whichever is higher is what you'll want to claim. Given that you're itemizing anyway for mortgage interest, it's definitely worth running both calculations to see which gives you the bigger deduction.

Thanks everyone for all the helpful advice! This community is amazing. Just to summarize what I've learned: since I'm expecting to make under $400 in net profit from my jewelry business, I likely won't need to file for self-employment taxes federally. But I should still check Arizona's specific requirements (sounds like I'll be fine there too since it's tied to federal filing). The key thing everyone keeps mentioning is tracking everything from the start - income AND expenses like materials, tools, packaging, etc. Even if I don't need to file this year, having good records will help if my business grows. I'm definitely going to set up a simple spreadsheet to track sales and costs. Really appreciate everyone taking the time to help a tax newbie! 😊

Great summary Max! Just want to emphasize one more thing that might be helpful as you get started - consider opening a separate bank account for your jewelry business, even if it's just a basic checking account. It doesn't have to be a "business" account necessarily, but having all your Etsy income and business expenses flow through one dedicated account makes tracking SO much easier come tax time. You'll have a clear record of everything business-related in one place rather than trying to sort through your personal transactions later. Plus, it helps you see how your little side hustle is actually performing! Even if you're only making $40-50 every few months, you'll have a much clearer picture of your actual profit margins when everything is separated out.

You might also qualify for the Qualified Business Income (QBI) deduction, which lets self-employed people deduct up to 20% of their business income. Though with your income level and the self-employment tax situation, it probably won't zero out your taxes completely.

One thing that might help reduce your self-employment tax burden is to make sure you're deducting the home office expenses if you work from home. As a graphic designer, if you have a dedicated space in your home that you use exclusively for your design work, you can deduct a portion of your rent/mortgage, utilities, and other home expenses. You can either use the simplified method (up to 300 sq ft at $5 per sq ft, max $1,500) or calculate the actual expenses based on the percentage of your home used for business. This directly reduces your net self-employment income, which means less self-employment tax. Also don't forget about equipment depreciation - your computer, monitor, drawing tablet, software licenses, etc. can all be deducted either as current expenses or depreciated over time depending on their cost. Every dollar you can legitimately deduct as a business expense saves you about 15 cents in self-employment tax.

Great question, Joshua! I can confirm what others have said - Form 2553 is absolutely a one-time filing. Once the IRS approves your S-Corp election (which you already have confirmation for), it stays in effect indefinitely unless you voluntarily revoke it or violate the S-Corp eligibility requirements. The confusion you're seeing online probably comes from mixing up the initial election form with the ongoing filing requirements. What you DO need to file annually now is Form 1120-S (S-Corporation Income Tax Return) by March 15th, and you'll need to issue yourself a Schedule K-1 as the sole shareholder. Since you're already into your second year with S-Corp status, make sure you're staying compliant with the reasonable salary requirement - you need to pay yourself wages through payroll (not just distributions) for any work you do in the business. This is probably the most important ongoing requirement to avoid IRS scrutiny. Keep that original approval letter somewhere safe - you may need it for banking, business applications, or if questions ever come up about when your election took effect.

I'm glad this thread cleared up the confusion! I was actually in the exact same boat last year with my consulting LLC. The misinformation online about "annual S-Corp elections" is really frustrating when you're trying to do things right. Just want to echo what everyone else confirmed - Form 2553 is definitely one-time only. I've been running my S-Corp election for three years now and have never had to refile it. The IRS approval letter you received is your golden ticket - that election stays valid unless you mess up the eligibility requirements or choose to terminate it. The real ongoing work is the annual Form 1120-S filing and making sure you're handling payroll correctly. I use QuickBooks Payroll to stay compliant with the reasonable salary requirements, and it's been worth every penny to avoid IRS headaches. One thing I wish someone had told me earlier: keep detailed records of how you determined your salary amount. Document your research on industry standards, your role/responsibilities, time commitment, etc. If the IRS ever questions your salary vs. distribution split, you'll be glad you have that paper trail ready to go.