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Great advice from everyone here! As someone who just started delivery driving myself a few months ago, I want to echo what others have said about setting aside money consistently. One thing that helped me was automating it - I set up my bank account to automatically transfer 22% of every deposit to a separate "tax savings" account. That way I never even see that money as "spendable" and I don't have to remember to manually set it aside each week. Also, don't forget about potential deductions beyond just mileage! I've been able to deduct part of my car insurance, phone bill, and even the insulated delivery bags I bought. Keep receipts for everything remotely work-related. For mileage tracking, I started using a simple voice memo on my phone at the start and end of each shift to record my odometer readings. Takes 5 seconds and gives me a backup if my tracking app ever glitches. The key is finding a system you'll actually stick with consistently! Good luck with your delivery hustle - the flexibility is amazing for college students!
This is super helpful! I'm also new to all this tax stuff and the automated transfer idea is genius. I was worried I'd forget to set money aside or be tempted to spend it. Quick question - do you transfer the 22% from your gross earnings or after you've deducted gas and other expenses? I'm trying to figure out the best way to calculate how much to actually set aside each week. Also, the voice memo trick for odometer readings is so smart! I've been trying to remember to open an app every time but I always forget when I'm rushing between deliveries.
Great question! I transfer the 22% from my gross earnings (total amount deposited from DoorDash/UberEats) before any expense calculations. Here's my reasoning: it's easier to be consistent with a simple percentage of what actually hits my account, and I'd rather overestimate than scramble for tax money later. When tax time comes, I'll get credit for all my mileage and expense deductions, so if I've saved too much, that's a nice bonus! But if I tried to calculate net income weekly and set aside a smaller percentage, I'd probably mess up the math or forget to account for something. The voice memo thing has been a lifesaver! I just say "Starting delivery, odometer 45,231" when I leave my house and "Ending delivery, odometer 45,287" when I get back. Takes literally 3 seconds and I can review them later if my tracking app has issues. Way more reliable than trying to remember to open an app while I'm focused on driving safely.
Hey CosmicVoyager! Welcome to the gig economy - it's great that you're thinking about taxes upfront rather than scrambling later like so many of us did! Based on your expected earnings of $200-250/week, you'll likely make around $10,000-13,000 annually. Here's my take after doing delivery work for over a year: **Quarterly Taxes:** With proper mileage tracking, you probably won't hit the $1,000 threshold that requires quarterly payments in your first year. However, I'd still recommend setting aside 20-25% of your gross earnings in a separate account - this covers both self-employment tax (15.3%) and potential income tax. **Essential tracking from day one:** - Mileage (every single mile while the app is on) - All car-related expenses during work hours - Phone bill percentage (you need it for the apps) - Any delivery supplies you purchase **Pro tip:** Download a mileage tracking app before your first delivery and never rely on just one method. I use both an app AND keep a small notebook in my car as backup. Since you mentioned your car isn't great on gas, definitely calculate both the standard mileage deduction AND actual vehicle expenses when tax time comes - you can use whichever method gives you the bigger deduction! The fact that you're asking these questions now puts you way ahead of where most of us started. You've got this!
This is such comprehensive advice, thank you Jackson! I really appreciate you breaking down the numbers based on my expected income range. The 20-25% savings rate makes sense - better to be safe than sorry with taxes. I'm definitely going to start with both a mileage app and the notebook backup system you mentioned. The idea of calculating both standard mileage vs. actual expenses is really smart, especially since my car does drink gas like crazy. One follow-up question - when you say "every single mile while the app is on," do you mean from the moment I turn on DoorDash to when I turn it off for the day? Or just the miles while I'm actually on a delivery? I want to make sure I'm tracking correctly from the start. Thanks again for all the detailed guidance - it's really reassuring to hear from someone who's been through this process successfully!
Just went through this last month. The 507 code almost always means identity verification. In my case, they needed to verify I was really me because I filed from a different address than last year. I had to upload a copy of my driver's license and a utility bill through their ID verify site. Refund was released 9 days later. Don't stress too much - it's pretty routine, just annoying.
Thanks everyone for all the helpful advice! I called the identity verification number this morning and you were all right - they needed to verify my identity because we moved twice last year. The agent was super nice and said the 507 code should be cleared within 48 hours, and my refund should process in 2-3 weeks. Such a relief! I really appreciate all the suggestions, especially the specific phone number to call. Feeling much better about our moving plans now!
I'm glad to see this thread helped so many people resolve their 507 errors! For anyone still dealing with this issue, I wanted to add that it's also worth checking if you have any outstanding notices or requirements from the IRS before calling. Sometimes the 507 code can be triggered by missing forms like a Schedule C if you reported self-employment income, or if there's a mismatch between your federal and state filings. Also, if you're planning to move soon like the original poster, make sure to update your address with the IRS using Form 8822 after you move. This can help prevent similar identity verification issues in the future. The IRS gets suspicious when they see filing patterns that don't match their records, so keeping your address current is really important. Hope everyone gets their refunds sorted out quickly!
This is really helpful additional info! I didn't know about Form 8822 for address changes. I'm actually dealing with a similar situation right now - filed from a different state than last year and got the 507 code. Been reading through this whole thread and it's been super informative. Quick question though - do you know if there's a time limit on how long the IRS will hold your refund for identity verification? I'm worried about missing some kind of deadline while trying to get this sorted out.
Don't forget about self-employment taxes! Even if your YouTube business has losses that offset your other 1099 income for income tax purposes, you'll still pay SE tax on the net profit from your existing 1099 work. The SE tax is calculated separately for each Schedule C business - losses from one don't offset SE tax on another. Also, have you looked into an S-Corp election for your profitable 1099 business? At your income level, you might save significantly on SE taxes by taking a reasonable salary plus distributions.
That's a really good point about the self-employment taxes that I hadn't considered. So even if the YouTube losses offset my income tax, I'd still be paying the full SE tax on my current 1099 income? Regarding the S-Corp suggestion - I've been considering that actually. What would you consider a "reasonable salary" for my current 1099 work given the income range I mentioned?
Yes, you would still pay the full SE tax on your current 1099 business. Self-employment tax is calculated on each Schedule C separately - losses from one business don't reduce SE tax liability for another profitable business. For an S-Corp reasonable salary, there's no exact formula, but it should be comparable to what you would pay someone else to do the same work. For a high-earning consultant making $135-270k, a reasonable salary might be around 50-60% of your total profits. The remaining amount could be taken as distributions not subject to SE tax, potentially saving you thousands. However, S-Corps come with additional compliance requirements and costs (payroll processing, separate tax return, etc.). At your income level though, the savings would likely outweigh these costs. I'd recommend running the numbers with a tax professional familiar with your specific situation.
One thing I haven't seen mentioned yet is the importance of timing your equipment purchases strategically. Since you're expecting significant expenses in the early years of your YouTube business, consider using Section 179 expensing or bonus depreciation to deduct the full cost of equipment purchases in the year you buy them, rather than depreciating them over several years. This is especially valuable when you have high income from your other sources that the YouTube losses can offset. For example, if you buy $13.5k worth of camera equipment in year one when your YouTube channel has minimal income, you can potentially deduct the full amount against your W-2 and 1099 income that same year. Also, keep in mind that the IRS looks at the totality of circumstances when determining business vs. hobby status. Even if you show losses in the first few years, factors like time and effort devoted to the activity, expertise you bring, success in similar activities, and expectation of asset appreciation all work in your favor. Since you already have successful business experience with your 1099 work, that demonstrates you understand how to run a profitable business. Just make sure you're treating the YouTube venture like a real business from day one - separate accounts, business plan, marketing efforts, etc. The documentation you create now will be crucial if the IRS ever questions your deductions later.
Just to clarify something I'm seeing in some of the responses - the key date is December 31st of the tax year. If your son turned 18 in December 2023, that means he was 17 at the beginning of 2023 and turned 18 during the year. For Child Tax Credit purposes, he needed to be under 17 at the end of the year (December 31, 2023) to qualify. I had a similar situation when my daughter turned 17 in November a couple years back. I remember being disappointed to lose that credit, but was still able to claim her as a dependent for other purposes. Double-check your son's birthdate against these requirements just to be certain.
I went through this exact situation two years ago when my son turned 18 in November. The age cutoff rules can be really frustrating, especially when you're used to getting certain credits year after year. Just want to add one thing that helped me - make sure you keep detailed records of his college expenses if he's starting school. Even though you lose the Child Tax Credit, education credits like the American Opportunity Tax Credit can actually be more valuable (up to $2,500 vs the $2,000 CTC). You'll want to save all tuition statements, book receipts, and required fee documentation. Also, if your son has any part-time job income, make sure he understands whether he needs to file his own return. The IRS gets copies of his W-2s regardless, so coordination between your returns is important to avoid any complications with dependent claims. The silver lining is that this is typically a one-time adjustment year. Once you navigate it this time, you'll know exactly what to expect going forward!
Caesar Grant
Great breakdown on the technical side! As someone who's been through multiple filing seasons, I can confirm the WMR interface really doesn't correlate with actual processing speed. I've noticed that people with similar situations (same credits, filing status, etc.) can have completely different WMR experiences even when filed on the same day. The backend processing seems to depend more on which batch your return gets assigned to rather than anything you can control. It's frustrating that the IRS doesn't provide more granular status information, but understanding that it's essentially a "black box" until completion helps manage expectations. Thanks for bringing some actual analysis to this topic instead of the usual speculation!
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Paloma Clark
ā¢Exactly! I'm new here but went through this exact frustration last year. Filed early February and watched my status bounce between one bar and "still processing" for over a month while my neighbor who filed weeks after me got her refund in 10 days. It's so reassuring to hear from people who actually understand the system instead of just guessing based on their own single experience. The batch assignment explanation makes so much sense - it's like being randomly assigned to different checkout lines at the store, some just move faster regardless of what you're buying.
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Niko Ramsey
This is incredibly helpful! I'm a newcomer here and filed my return 3 weeks ago with Schedule C income (freelance graphic design work). My WMR has been stuck on one bar the entire time and I was starting to panic reading all the conflicting advice online. Your explanation about the RTF updating independently from WMR makes perfect sense - it's like the difference between what's actually happening in the kitchen versus what the order tracking app shows you. Really appreciate you sharing actual technical knowledge instead of just anecdotal experiences. Do you know if there's any pattern to how gig worker returns get batched? I'm wondering if the additional verification you mentioned for Schedule C filers happens at a specific stage in the process.
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Carmen Lopez
ā¢Welcome to the community! As another newcomer who just went through this exact scenario, I can totally relate to the panic. I'm also a freelancer (web development) and filed with Schedule C about a month ago. Mine was stuck on one bar for weeks before switching to "still processing" last week. What helped me was realizing that the additional verification for gig workers seems to be more thorough - they're probably cross-referencing our reported income with 1099s and making sure everything adds up. From what I've gathered reading through this community, Schedule C returns often get flagged for manual review regardless of accuracy, which explains the longer timelines. The batch assignment seems somewhat random, but the verification stage appears to be pretty standard for us freelancers. Hang in there!
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