One thing nobody mentioned yet is that you should open a separate business checking account ASAP if you haven't already! Makes tracking business income and expenses sooooo much easier when tax time comes. I didn't do this my first year and spent like 3 full days sorting through personal bank statements to figure out what was business vs personal. Nightmare!

As someone who just went through this exact situation last year, I can offer some reassurance! You're not automatically doomed for missing those first two quarterly payments, especially since you literally didn't know about the business when the April deadline hit. The key thing is to make your September 15th payment and make it substantial enough to cover what you should have paid earlier. Since you started in March and have made $34,500 so far, you're looking at owing both regular income tax AND self-employment tax (that 15.3% Social Security/Medicare hit that nobody warns you about). Here's what saved me: I calculated what my total tax liability would be for the year, then made my September payment large enough to get me to that 90% threshold by year-end. The IRS is surprisingly reasonable about first-year businesses as long as you show good faith effort to catch up. Also, definitely start setting aside 25-30% of every payment you receive going forward. I use a separate savings account and transfer the tax money immediately when clients pay me. Trust me, you don't want to be scrambling to find tax money next April! Your photography business sounds like it's off to a great start - don't let the tax stress overshadow that success!

Has anyone managed to figure out how to handle the carryover of excess foreign tax credits on Form 1116? I have more foreign tax paid than I can claim this year, and I'm totally confused about how to track this for future years.

I went through this exact same situation last year with foreign dividends and capital gains. Here's what I learned after making some mistakes initially: For your $15,200 in dividend income with $3,700 in foreign taxes withheld - that's straightforward passive income for Form 1116. Make sure you have all your 1099-DIV forms and any foreign tax documents. Regarding your $22,000 capital gains question - this is where it gets tricky. Since you're a US resident making investment decisions from the US, those gains are almost certainly US-source income, even though the stocks are foreign companies. This means they WON'T increase your foreign income on Form 1116, so they won't help you claim more of your paid foreign taxes. The key insight is that the IRS looks at where the economic activity (your investment decisions) occurred, not where the company is headquartered. I initially made the mistake of thinking all my foreign stock gains were foreign-source income and had to file an amended return. One tip: if you paid foreign taxes on those capital gains (which is rare but can happen), that might change the sourcing rules. But in most cases with foreign stocks, you're only dealing with dividend withholding taxes, not capital gains taxes from the foreign country. The good news is your dividend situation alone should give you a decent foreign tax credit. Just make sure to use the correct exchange rates from the IRS website for converting everything to USD.

Have you considered having your father-in-law claim HOH instead? If he provided more than half the cost of the home and had your husband's daughter living there, he might actually qualify. Might be worth looking into as an option if your husband has to amend his return anyway.

I've been through an IRS audit before and want to offer some perspective on what you can expect. First, don't panic - the IRS is generally reasonable when dealing with honest mistakes, especially when tax software like TurboTax guided you incorrectly. For your situation, you'll likely need to file an amended return changing from Head of Household to Single status. This will increase your tax liability, but you'll probably still be able to claim your daughter as a dependent and get the Child Tax Credit if you meet the other requirements. The key is responding promptly and honestly to the audit notice. Include a letter explaining that this was an unintentional error based on tax software guidance, and that you're willing to correct it. The IRS appreciates taxpayers who are cooperative and straightforward. As for penalties, if this is clearly an honest mistake with no intent to defraud, you'll likely just owe the additional tax plus interest. The IRS has "reasonable cause" exceptions for penalties when taxpayers can show they made a good faith effort to comply. One last tip: keep detailed records of everything you send to the IRS and consider sending responses via certified mail so you have proof of delivery. This whole process might take a few months, but being proactive and honest usually leads to the best outcome.

Has anybody tried FreeTaxUSA? My buddy swears by it for self-employment taxes and says it's way cheaper than both TurboTax and TaxSlayer while doing basically the same thing.

I've been using TurboTax for about 5 years now and while it's definitely more expensive, I think it's worth it for the peace of mind, especially with a mixed income situation like yours. The interview-style questions really help catch deductions I wouldn't have thought of on my own. For your mortgage interest deduction as a new homeowner, TurboTax does a great job walking you through not just the basic interest but also things like points you may have paid at closing and PMI deductions if applicable. They also have really good explanations about what qualifies and what doesn't. The self-employment section is thorough too - it'll ask about everything from home office expenses to mileage to professional development costs. I've found their audit support to be reassuring as well, though hopefully you'll never need it. That said, if budget is a major concern, TaxSlayer will definitely get the job done for much less money. You just might have to be more proactive about researching deductions on your own rather than being guided to them.

570 codes often pair with 971 notice codes. Check for that too. It's usually just verification. Nothing to panic about. Most clear in 2-3 weeks. Tax Advocate Service can help if it goes longer. They prioritize financial hardship cases. Keep checking your transcript weekly. Look for the 571 release code. That's your signal that processing has resumed.

I totally understand your frustration - once you're in their "system" it really does feel like you're flagged forever! I've been dealing with similar issues since a 2017 offset situation. One thing that helped me was setting up an online IRS account if you haven't already. Sometimes notices show up there before they're mailed, and you can see additional account details that don't appear on the basic transcript. Also, with three kids in activities, I know how tight budgets can be - consider reaching out to Tax Advocate Service (taxpayeradvocate.irs.gov) if this drags on beyond 30 days. They specifically help with cases involving economic burden and have more power to expedite reviews than regular customer service. Hang in there - most 570 codes with CTC do resolve within a few weeks, especially if everything on your return is accurate.