Has anyone used the annualized income method instead? I'm in a similar situation but my income is VERY uneven throughout the year, so paying equal installments seems like it would create cash flow problems for me.

I'm in a very similar boat - just started freelancing in March and was totally confused about estimated payments! Reading through all these responses has been super helpful. One thing I'd add is to make sure you're also setting aside money for self-employment tax (the additional 15.3% for Social Security and Medicare) on top of your regular income tax. That caught me off guard my first year since as a W-2 employee, half of that was paid by my employer. Also, don't forget that you can deduct half of the self-employment tax when calculating your adjusted gross income, which can help reduce your overall tax burden. It's not huge but every bit helps when you're navigating this for the first time! The safe harbor route definitely seems like the way to go for peace of mind, especially in your first year when you're still figuring out your income patterns.

Kind of off-topic but this is why I always do a "paycheck checkup" a couple times a year using the IRS withholding calculator. I had a similar issue at a previous job and caught it after my third paycheck because the net amount seemed too high. Saved me from a huge surprise at tax time. OP, for the future, always check your first few paystubs at any new job to make sure taxes are being withheld correctly. The IRS has a good withholding estimator tool that can help you figure out approximately how much should be coming out.

This is a really frustrating situation, and I feel for you having to deal with this mess. As others have mentioned, employers are absolutely required to withhold federal income tax based on your W4 - they can't just decide not to do it. Since you have your original W4 showing you claimed 0 exemptions and your 2024 W-2 shows $0 federal withholding in Box 2, you have solid documentation that this was their error, not yours. The fact that they withheld correctly in 2023 but not 2024 suggests something changed in their payroll system or process. A few things to consider while you're waiting for HR to respond: 1. Request a copy of what W4 they have on file for you currently - sometimes forms get lost or replaced incorrectly 2. Ask for detailed payroll records showing how your withholding was calculated (or not calculated) 3. Document all your communications with HR about this issue Even though you'll still need to pay the taxes you owe, having this documentation could be important if the IRS assesses any penalties. You might also want to look into whether your employer could be liable for any interest or penalties you incur due to their mistake - that would probably require talking to a tax professional though. Definitely keep pushing HR for answers. This kind of payroll error affecting someone's entire tax year is a serious issue they need to address and prevent from happening to other employees.

Don't forget that the HSA contribution limits are different for individual vs family coverage! For 2025, you can contribute up to $4,150 for individual coverage or $8,300 for family coverage (plus an extra $1,000 if you're 55+). Since you have three people (you, wife, bio daughter) on the HDHP, you qualify for the family contribution limit even though your adopted kids aren't on that plan. Make sure you're taking full advantage of this if possible - HSAs are triple tax-advantaged and one of the best tax benefits available!

Congratulations on the adoption process! I'm a CPA who specializes in family tax situations, and I can confirm what others have said - you can absolutely maintain your HSA while your adopted children have Medicaid coverage. The key point is that HSA eligibility is determined by who is covered under the qualifying High Deductible Health Plan, not by what insurance your dependents have. Since you, your wife, and biological daughter are all covered by your employer's HDHP, you remain eligible for HSA contributions at the family level. A few important things to keep in mind: 1. You can only use HSA funds for qualified medical expenses for those covered by your HDHP (so not for your adopted children's expenses while they're on Medicaid) 2. Keep detailed records of who has what coverage and when - this will be crucial for tax filing 3. Make sure your tax preparer understands your mixed insurance situation, as some software doesn't handle these scenarios well The IRS Publication 969 covers HSA rules in detail if you want the official guidance. This is actually a fairly common situation with blended families, foster care, and adoption scenarios, so don't worry - you're not breaking any new ground here!

I went through this exact same nightmare last year! My tax preparer claimed she filed my extension but the IRS had no record of it. Here's what worked for me: 1. **Get everything in writing from your preparer** - Ask for a detailed timeline of when she claims to have filed, what confirmation she received, and any reference numbers. That screenshot might be helpful even if you doubt it. 2. **Request your IRS transcript immediately** - File Form 4506-T or get it online through IRS.gov. This will show exactly what the IRS has on file for you and can definitively prove whether an extension was filed or not. 3. **For Form 843, focus on reasonable cause** - In Part II, emphasize that you hired a licensed professional specifically to handle this filing requirement and reasonably relied on their expertise. Include copies of your contract/agreement showing you paid them to file the extension. 4. **Document your good faith effort** - Include evidence that you provided all necessary information to your preparer well before the deadline and that filing the extension was explicitly part of their service. The IRS is generally sympathetic when taxpayers can show they made good faith efforts to comply by hiring professionals. Just make sure your Form 843 tells a clear story of reasonable reliance on professional advice. Also, definitely pursue getting reimbursed by your preparer - most carry professional liability insurance for exactly these situations!

I'm so sorry you're dealing with this - tax preparer mistakes are incredibly frustrating! I went through something similar a few years ago and learned some hard lessons. One thing I'd add to the excellent advice already given: when you're preparing your Form 843, make sure to include a timeline of events in your reasonable cause explanation. Show exactly when you hired the preparer, when you provided all necessary documents, when the extension was supposed to be filed, and when you first discovered the problem. The IRS likes to see that you acted promptly once you became aware of the issue. Since you just found out about this last week, make sure to emphasize that you're filing the abatement request immediately upon discovering the problem. Also, if your preparer is enrolled with the IRS (has a PTIN number), you can look up their credentials on the IRS directory. This can be useful documentation to include showing that you reasonably relied on a properly credentialed professional. One last tip - if your Form 843 gets denied initially, don't give up! You can request a supervisory review or file an appeal. Sometimes it just takes getting in front of the right person who understands the situation better. Good luck with this mess - I hope you get it resolved quickly!

I'm surprised nobody mentioned that Person B should be careful about timing. If Person A died recently and Person B immediately gives the money to Person C, the IRS might view this as trying to circumvent Person A's wishes. Not saying it's illegal, but in my experience (I went through something similar), it's better to wait a few months between receiving the insurance proceeds and gifting them to someone else. Makes it clearer that these are separate transactions.

This is such a helpful discussion! I'm dealing with a similar situation right now where my aunt left me as beneficiary on her policy, but I know she would have wanted some of the money to go to my cousin who helped care for her. Reading through all these responses, it sounds like the key points are: 1) The insurance proceeds themselves aren't taxable to me, 2) Any gifts over $19,000 require filing Form 709 but probably won't result in actual taxes owed, and 3) There are strategies like gift splitting with my spouse or spreading payments over multiple years to minimize paperwork. The timing point about waiting a few months before making the gift is really smart advice too. I hadn't thought about how immediate transfers might look to the IRS. Thanks everyone for sharing your experiences - this community is incredibly knowledgeable!