One thing nobody has mentioned yet - if you don't set up a new agreement when your short-term plan expires, the IRS can also offset (take) any future tax refunds until your debt is paid. They do this automatically without having to go through the normal collection process. This happened to me for three years straight before I finally set up a proper installment agreement.

Just want to add that ignoring the end of your payment plan is risky for another reason - the IRS charges both penalties AND interest on unpaid tax debt. The failure-to-pay penalty is 0.5% per month (up to 25% total), and the interest rate is currently around 7%. Those keep accumulating even if they haven't started active collections yet.

Has anyone used TurboSelf-Employed for reporting craft sales? I'm trying to decide between that and H&R Block.

@Sophia Long, yes you absolutely need to report that $4,200! Even though it seems like a small amount compared to your regular job, the IRS requires you to report ALL income. Since you made over $400 from self-employment, you'll also owe self-employment taxes (about 15.3% for Social Security and Medicare). Here's what you need to do: 1. File Schedule C to report your business income and expenses 2. File Schedule SE for self-employment tax 3. Start tracking everything NOW - save all receipts for materials, shipping, packaging, even part of your phone/internet bills Don't panic about not having perfect records this year. Try to reconstruct what you can remember spending on supplies, and the IRS is generally reasonable about estimates if they're realistic. One tip: you can deduct the cost of materials, Etsy fees, PayPal fees, packaging supplies, and even a portion of your home if you have a dedicated workspace. These deductions will reduce your taxable income significantly. You've got this! It's not as scary as it seems once you get organized.

Just to add another wrinkle - the timing matters too! If you claimed the credit on your 2023 tax return for a purchase made in 2023, the 3-year clock started on the purchase date, not the filing date. So if your first EV was purchased on March 15, 2023, you'd be eligible again on March 16, 2026. I made this mistake and thought I had to wait until the 2027 tax year, but an accountant corrected me.

Great question about timing! The 3-year rule applies differently to new vs used EV credits. For the used clean vehicle credit (which is what you're dealing with), it's exactly as Alice mentioned - the 3-year waiting period starts from the purchase date of your first qualifying vehicle. For the new clean vehicle credit, there's actually no similar restriction - you can claim it multiple times as long as you meet the other requirements (income limits, vehicle price caps, etc.). So theoretically, you could buy a new EV every year and claim the credit each time if you qualify. The confusion often comes from the fact that these are two separate credits with different rules, even though they're both for electric vehicles. The used credit has the 3-year restriction specifically to prevent people from flipping used EVs just for the tax benefit.

For the student loan aspect - which I'm guessing is why y'all are filing separately - make sure you really run the numbers! Sometimes the tax benefits of filing jointly outweigh the student loan payment savings. My wife and I were in a similar boat (about 220k vs 85k incomes) and we found that we saved more overall by filing jointly and just paying the higher loan payment. Totally depends on how much debt, interest rates, and how close to forgiveness you are though.

Great question! As someone who's navigated this exact scenario, here are the key factors to consider: **Tax Credits:** With your income levels, you'll want to calculate who can still qualify for the Child Tax Credit. The phase-out begins at $200k for single/MFS filers, so your spouse at $98k would likely get the full $2,000 per child credit, while you might be partially or fully phased out. **Student Loan Impact:** This is huge! Whoever claims the kids will have a larger household size for IDR calculations, which typically means lower monthly payments. Given that your spouse is the one with student loans, having them claim the children could significantly reduce their monthly obligation. **Head of Household:** Since you lived together, neither of you can file as Head of Household, so you're both stuck with MFS rates. **My recommendation:** Have your spouse claim both children. They'll likely get better tax benefits due to income limits, AND it will help with the student loan payments by increasing their household size for IDR purposes. Definitely run the numbers both ways to be sure, but in most cases with your income split, the lower earner claiming dependents works out better overall when you factor in both tax savings and loan payment reductions.

Don't forget about COMMUTING miles vs BUSINESS miles. This tripped me up my first year with an S corp. The miles from your home to your primary business location are considered commuting and are NOT deductible, even with an accountable plan. Only miles from your office to client locations, between different work sites, or for other business purposes can be reimbursed. I lost about 30% of my claimed mileage last year because I incorrectly included commuting miles in my reimbursement request. Had to amend returns and it was a huge headache.

One thing I'd add to this great discussion - make sure you're properly documenting the BUSINESS PURPOSE for each trip, not just the mileage. The IRS requires more than just "business meeting" in your records. For each business trip, you should document: - Date and time - Starting and ending locations with addresses - Business purpose (specific client name, type of meeting, etc.) - Total miles driven - Any personal stops (which you'd subtract from business miles) I learned this the hard way during an audit a few years ago. The IRS agent wasn't satisfied with generic entries like "client meeting" - they wanted to see "Meeting with Johnson Construction to discuss Q1 project timeline" or "Picked up materials for Smith renovation at Home Depot." Also, since you mentioned using Gusto for payroll, they have expense reporting features that can help you track and submit mileage reimbursements properly. You can set up recurring monthly submissions so you don't have to do everything at year-end like you're planning for this year. Good luck with your first year as an S corp!