This thread has been incredibly helpful! As someone who just started their first job out of college, I was completely baffled by all the abbreviations on my paystub. The "FED MWT EE" was definitely one of the most confusing ones. I really appreciate everyone explaining that it's just federal income tax withholding - the abbreviation makes it sound so much more complicated than it actually is! It's reassuring to know that this confusion is totally normal and that even the payroll professionals deal with these questions regularly. One thing that's become clear from reading through all these responses is how important it is to actually understand your withholding rather than just accepting whatever gets taken out. The tips about using the IRS Tax Withholding Estimator and double-checking that HR entered your W-4 information correctly are things I never would have thought to do on my own. Thanks to everyone who shared their experiences and tools - this community is awesome for helping newcomers navigate these financial basics that somehow never get taught in school!

This has been such an educational thread! I'm also a newcomer to the workforce and was completely confused by the FED MWT EE deduction on my paystub. It's really reassuring to see that literally everyone goes through this same confusion when they start working. What I found most helpful from all these responses is learning that this is just regular federal income tax withholding - not some mysterious extra fee or Medicare-related charge like I initially thought. The fact that different companies use different abbreviations for the same thing (Fed Income Tax, Federal W/H, etc.) definitely adds to the confusion for new employees. I'm planning to use several of the suggestions from this thread: checking with HR that my W-4 was entered correctly, trying the IRS Tax Withholding Estimator once I have a few more paystubs, and keeping better track of my year-to-date withholding amounts. It's amazing how much more confident I feel about managing my finances just from understanding what these deductions actually represent. Thanks everyone for sharing your experiences and making this less intimidating for those of us just starting out in our careers!

This thread has been incredibly helpful - I'm dealing with almost the exact same situation! My CPA told me we have until March 2026 to file for S corp election, but after reading everyone's responses, I'm now convinced there's been a major miscommunication. The timeline confusion between the election deadline (March 15, 2025 for 2025 tax year) versus the tax filing deadline (March 15, 2026 for 2025 taxes) seems to be more common than I realized. I'm definitely going to bring the Form 2553 instructions to my next meeting with my CPA to clarify this. One thing I'm still trying to wrap my head around - for those who have been through this process, how far in advance did you start preparing? It sounds like there's quite a bit of setup involved with payroll systems, state registrations, and getting the operational side ready before you can actually start taking advantage of S corp status. Also, has anyone had experience with the IRS rejecting an S corp election? I want to make sure I file everything correctly the first time rather than risk having to wait until 2026 if something goes wrong.

Your CPA is definitely confusing two different deadlines here! This is actually a really common mix-up that I see all the time. The March 2026 date they mentioned is when you'll FILE your 2025 S corp tax return (Form 1120S), but to actually ELECT S corp status for 2025, you need to file Form 2553 by March 15, 2025. If you wait until March 2026 to make the election, it would only be effective starting in 2026 - meaning you'd completely lose out on a full year of S corp tax benefits. Depending on your income level, this could easily cost you thousands in unnecessary self-employment taxes. You're absolutely right to be concerned about the salary and distribution setup. You cannot legitimately take S corp distributions until after you've filed the election. The proper sequence is: 1) File Form 2553 by March 15, 2025, 2) Set up payroll for reasonable salary, 3) Then take distributions beyond salary. I'd strongly recommend printing out the Form 2553 instructions and having a clarifying conversation with your CPA immediately. Show them the "2 months and 15 days" rule that's clearly stated in the IRS instructions. This is way too important financially to leave any room for confusion - trust your instincts on this timeline!

5 Did anybody mention the Two-Earner/Two-Job worksheet that's supposed to come with the W-4? My wife and I (both public employees) had the same problem until our accountant showed us this. The standard withholding calculations just don't work well for two-income households in similar income brackets.

This is such a common issue for dual-teacher households! I went through the exact same frustration for years. The problem is that the standard withholding tables assume one spouse earns significantly less than the other, but when you're both teachers making similar salaries, your combined income pushes you into higher tax brackets than what's being withheld. A few things that helped me figure this out: 1. The "Married" filing status on W-4s is designed for traditional single-earner households. When both spouses earn similar amounts, it dramatically under-withholds. 2. Your coaching income definitely compounds the problem - supplemental pay like coaching stipends often has minimal or no withholding, but it's still taxable income that pushes your total higher. 3. The $25 extra per paycheck ($600 annually) sounds like a lot, but it's probably not enough to cover the withholding gap created by two teacher salaries plus your coaching income. I'd recommend using the IRS withholding calculator (it's more accurate than the old worksheets) or switching both your W-4s to "Married but withhold at higher Single rate" and adding a specific dollar amount on line 4(c). For two teachers with similar salaries, you might need $75-100 extra per paycheck to break even. Don't feel bad about this - it's a systemic issue with how withholding is calculated for dual-income professional couples, not something you're doing wrong!

Thanks for all the helpful responses everyone! Just wanted to give a quick update - I went ahead and used my husband's SSN (primary taxpayer) in Direct Pay and the payment went through smoothly. Got a confirmation number and everything. I really appreciate everyone clarifying that even though I'm the one earning the freelance income, the IRS system only recognizes the primary taxpayer's info for joint filers. That makes total sense now that I understand how their computer systems work. I'm definitely going to look into some of the tools mentioned here (like taxr.ai) to help me calculate the right amounts for future quarters. I've been kind of winging it with estimated payments and want to make sure I'm not underpaying and getting hit with penalties. One last question - should I be making these payments every quarter even if my freelance income varies a lot month to month? Sometimes I have big projects and sometimes barely anything. Is it better to estimate conservatively and potentially overpay, or try to match the actual income more precisely each quarter?

One thing I'd add to the safe harbor discussion - you can also use the "annualized income installment method" if your freelance income is really sporadic throughout the year. This lets you calculate each quarterly payment based on your actual income for that specific period, rather than spreading an annual estimate evenly across four quarters. It's more paperwork (you'll need to file Form 2210 with your return), but it can save you money if most of your income comes in just one or two quarters. For example, if you have a huge project in Q3 but barely any income in Q1 and Q2, you could make smaller payments early in the year and a larger payment in Q3 when you actually earned the money. The downside is it's more complex to calculate and track. For most people with moderately variable income, the safe harbor approach that Mateo mentioned is much simpler and still protects you from penalties. But if your income swings are really dramatic (like making 80% of your annual freelance income in one quarter), the annualized method might be worth looking into.

This is a complex situation that's worth getting right given the property value involved. One thing I'd add to the excellent advice already given - make sure you're properly documenting everything for the suspended passive losses. The IRS requires you to track these losses year by year, and with depreciation creating substantial annual losses on a $1.6M property, you'll likely be accumulating significant suspended losses. Also consider the long-term strategy here. While you can't use these losses against your dividend income now, they'll become fully deductible when you eventually sell the property. Given that you inherited it with a stepped-up basis, you might want to think about whether this property fits your overall investment strategy or if there are better alternatives. One last thought - if you're planning any major improvements to the property, make sure you understand the difference between repairs (immediately deductible) and improvements (must be depreciated over time). With depreciation already exceeding your rental income, maximizing immediate deductions through proper repair classifications could be beneficial.

I've been dealing with a similar inherited rental property situation for the past two years, so I completely understand your confusion about the passive loss rules. What everyone has explained about the passive activity limitations is spot-on - you won't be able to use those rental losses against your dividends and capital gains with your income level. One thing I wish someone had told me earlier: consider doing a cost segregation study on that $1.6M property. With such a high basis, you might be able to accelerate some of the depreciation by separating out components like flooring, fixtures, and landscaping that depreciate over 5-7 years instead of the standard 27.5 years for residential rental property. This could create even larger losses in the early years that get suspended, which means bigger deductions when you eventually sell. Also, since this is inherited property, make sure you're not missing any potential deductions for estate-related expenses or property preparation costs that might be immediately deductible rather than added to basis. The combination of high depreciation and proper expense classification can really maximize those suspended losses for future use.