That tax shock is definitely real! I remember being so confused my first year out of college too. One thing that helped me was setting up a simple spreadsheet to track my paystubs and see exactly where my money was going each pay period. Since you mentioned student loans, make sure you're taking advantage of that student loan interest deduction when you file your taxes next year - it can save you a decent amount. Also, if your employer offers a 401k with any kind of match, definitely look into that. Not only does it reduce your current taxable income (which means less taxes withheld), but you're also getting free money from your employer. The withholding does seem high, but California really does hit you hard with state taxes. I'd recommend using the IRS withholding calculator others mentioned to double-check, but don't be surprised if it's actually pretty close to correct. Better to have a little too much taken out than to owe a big chunk in April!

The 31% withholding rate you're seeing is unfortunately pretty typical for California, especially for new graduates. I went through the exact same shock when I started my first job here! A few things that might help: - Double-check that you filled out your W-4 correctly. The new form (post-2020) can be confusing, and many people accidentally have too much withheld - California's SDI (State Disability Insurance) is currently 0.9% of your wages, which is unique to CA - Your effective tax rate when you actually file will likely be lower than 31% due to standard deduction and other factors Since you mentioned student loans, definitely keep track of the interest you pay - that deduction alone could save you several hundred dollars when you file. Also, if your company offers a 401k with matching, contributing even a small amount will reduce your taxable income and lower your withholding. The good news is that if you're having too much withheld, you'll get it back as a refund next spring. But it's worth running the numbers through the IRS withholding calculator to see if you can adjust and get more in your paychecks now.

Can someone explain the QBI calculation in simple terms? If I made $48,000 from contract work and had $13,000 in business expenses, how much QBI deduction would I get? Still trying to wrap my head around this.

Just wanted to add another important point about QBI - make sure you understand the difference between business income and investment income. Only your actual business profits count toward QBI, not things like interest, dividends, or capital gains from investments. Also, if you're married filing jointly, your spouse's income counts toward that threshold calculation even if they don't have any business income. So if your spouse has a high W-2 salary, you might hit those income limits faster than you'd expect. It's worth running the numbers both ways to see how filing status affects your QBI deduction. One last tip: if you're close to those income thresholds, consider timing some business expenses or income to stay below the limits if possible. The difference between getting the full 20% deduction versus having it phase out can be substantial!

Has anyone considered using a Solo 401k instead of a SEP IRA? When I was in your exact situation, I found that a Solo 401k let me contribute significantly more than a SEP IRA would.

Great discussion here! I'm in a similar situation with my freelance consulting income alongside my W-2 job. One thing I'd add is that if you're just starting out with retirement savings from self-employment income, don't get too caught up in optimizing between SEP IRA vs Solo 401k initially - the most important thing is to start saving something. That said, I did switch from SEP IRA to Solo 401k after my second year once I understood the benefits better. The Solo 401k does allow for much higher contributions, especially if your self-employment income is on the lower side. With my consulting bringing in about $35,000 last year, I was able to contribute the full $23,000 employee contribution plus about $6,400 employer contribution with the Solo 401k, versus only being able to do about $6,400 total with the SEP IRA. For anyone considering the switch, just make sure your provider supports Solo 401ks - not all do, and some charge higher fees than others.

Just to add my experience - I was in the EXACT same situation during college. Had work study all 4 years and didn't file until senior year when I got a proper internship. I talked to an accountant years later who said since I was owed refunds (not that I owed any tax), there was no penalty for filing late. Apparently the IRS doesn't penalize you for filing late if THEY owe YOU money! I ended up filing the old returns and got small refunds for each year. The whole process was pretty easy. If I were you, I'd file those old returns just to get closure and the small refunds you're probably entitled to.

Don't stress too much about this! You're definitely not alone - so many college students go through this exact same confusion about work study income and filing requirements. From what you've described, you were likely not required to file for those years since your earnings were well below the filing thresholds. Work study income is treated like regular W-2 wages, so the standard filing requirements apply. However, since you had federal taxes withheld (even those small amounts of $11 and $9), you were actually entitled to get that money back as a refund! The IRS doesn't charge penalties for filing late when they owe YOU money, but there is a time limit to claim refunds - generally 3 years from the original due date. For 2021, you'd have until April 2025 to file and claim that $11 refund, and for 2022, until April 2026 for the $9. It's not a huge amount, but it's money that's rightfully yours, and filing those returns would give you peace of mind. Also, don't forget to check your state filing requirements! Some states have much lower thresholds than federal, so you might need to file state returns even if federal wasn't required. You're being very responsible by looking into this now - better late than never!

Has anyone actually gotten an OIC approved recently? I heard they're rejecting almost all of them now because of new internal policies. Not sure if its even worth all this trouble with the expenses.

Based on your situation, you should list your reasonable share of the housing expenses even though you're not directly paying rent. The IRS looks at your overall household contribution, not just whose name is on specific bills. For your specific case, I'd recommend option 2 - listing the actual amount your partner pays ($1,500) as your housing expense, but you'll need to clearly document how you contribute to the household through utilities, groceries, and insurance payments. This shows the IRS that you're genuinely sharing the housing burden. Make sure to include: - A written explanation of your living arrangement - Bank statements showing your regular payments for household expenses - Documentation that your combined contributions (your utilities/food + partner's rent) cover the total household costs The IRS will compare this against their standard allowable amount ($2,400 in your case), and since $1,500 is less than the standard, it should be acceptable. The key is transparency and consistent documentation that matches what you report on your forms.