Has anyone used TurboTax for calculating QBI? I tried using it last year and it seemed to miss some deductions. Wondering if H&R Block or TaxAct handle it better for self-employed people?

One thing to keep in mind with your woodworking business - make sure you're tracking ALL your eligible expenses. Beyond the obvious materials and tools, you can also deduct things like: - Portion of your home utilities if you're using garage space exclusively for business - Vehicle expenses for trips to buy materials or deliver furniture - Business insurance premiums - Professional development (woodworking classes, trade shows) - Marketing costs (website, business cards, photography of your work) The more legitimate business expenses you can document, the higher your net profit calculation will be for the QBI deduction. Just make sure you're keeping detailed records and receipts for everything. The IRS loves to see good documentation, especially for home-based businesses. Also, since you're making decent money from this side hustle, you might want to consider making quarterly estimated tax payments to avoid underpayment penalties. The QBI deduction helps, but you'll still owe self-employment tax on that $13,600 profit.

What tax software did you use to calculate all this? I've been using TurboTax for years but it doesn't really break down the effective rate clearly.

This is really eye-opening! I think a lot of people get scared by the marginal tax rates they hear about (like "I'm in the 24% bracket!") without realizing that's only applied to income above certain thresholds. Your actual calculation shows how the progressive system works in practice. I'm curious - did you factor in any state income tax in your 9.37% figure, or is that purely federal? Also, for those of us who aren't as financially savvy, do you have any tips on tracking all these different tax components throughout the year? I feel like I'm always surprised by my final tax situation because I don't keep good records of things like sales tax on major purchases. It's refreshing to see someone actually run the numbers instead of just complaining about taxes in general. Makes me want to do my own analysis for this past year!

Guys seriously use taxr.ai it changed everything for me. My 2023 return was stuck in limbo for months with a "still processing" message. I finally checked my transcript and saw codes 570 and 971 but had no idea what they meant. The taxr tool explained I had an income verification hold and even estimated when it would be released based on current IRS processing times. The estimate was spot on - refund hit my account exactly when they predicted.

Just to add to what everyone's saying - when you first look at your transcript, don't panic if you see a bunch of codes you don't recognize! The key ones to focus on for refund tracking are the ones Aiden mentioned. Also, pay attention to the "as of" date at the top of your transcript - that tells you when it was last updated. Sometimes it takes a few days for new activity to show up, so if you don't see recent changes, check back in a couple days. The transcript is definitely way more informative than the Where's My Refund tool once you understand how to read it!

One thing to consider is filing a new W-4 with your next employer when you get a new job. If you know you've had too much withheld already this year, you could adjust your withholding to compensate. The W-4 has changed in recent years and now has specific sections for multiple jobs and additional income. Just make sure you don't go too far and end up owing at tax time!

I'm sorry this happened to you - the shock of seeing that much taken out is really rough when you're already dealing with job loss stress. Just to add another perspective, you might want to consider whether you had any pre-tax deductions from your regular paycheck (like 401k contributions, health insurance premiums, etc.) that wouldn't apply to the severance payment. Sometimes this makes the tax withholding look even more dramatic by comparison since your regular paycheck had those pre-tax reductions but the severance doesn't. Also, if your company offered any continuation of benefits (like COBRA), factor that into your budget planning. The combination of higher upfront costs for health insurance plus the tax withholding can really squeeze your finances during unemployment. You might want to look into marketplace plans if COBRA is too expensive - sometimes there are better options available depending on your situation. Hang in there, and definitely follow up with HR like others suggested. Even if they can't change the withholding now, they might have other resources or information that could help.

This is why the tax code needs major reform!! These circular references are deliberately confusing to make people mess up their taxes. It's a trap to collect more penalty fees. The whole system is rigged against average people who don't have accountants.

I ran into this exact same circular reference nightmare last year! What finally worked for me was treating it like an iterative process rather than trying to complete each form perfectly the first time through. Here's the step-by-step approach that broke the loop for me: 1. Start with your 1099-B and calculate your basic capital gain/loss (proceeds minus cost basis) 2. Put that preliminary amount on Schedule D Line 21 (or wherever your gain/loss lands) 3. Transfer that number to Form 1040 Line 13 4. Complete your Form 1040 through Line 44 using this preliminary capital gain 5. Now go back to Schedule D and use the tax information from Line 44 to complete any remaining calculations 6. If the final Schedule D number is different from your preliminary amount, update Form 1040 Line 13 and recalculate For a single stock sale like yours, the numbers usually don't change much between iterations, so you might only need to go through this process once or twice. The key insight is that these forms were designed assuming you'd use tax software that handles the circular references automatically - doing it by hand requires this back-and-forth approach. Don't let it drive you crazy - you're not missing something obvious, the forms really are designed this way!