Just want to add that if your capital gains came from crypto, make sure you're tracking all your transactions properly. The IRS is really cracking down on crypto reporting. I learned this the hard way when I got a CP2000 notice questioning my crypto gains.

Miguel, congratulations on your gains! Based on what you've described, you're likely in a good position with the safe harbor rule. Since your prior year tax liability was $0, you should be protected from underpayment penalties even without making estimated payments. However, I'd strongly recommend setting aside about 22-24% of those gains ($15,500-$17,000) for taxes. Short-term capital gains are taxed as ordinary income, so combined with your internship income, you'll likely be in the 22% bracket for at least part of those gains, plus you'll owe self-employment tax considerations. Even though you may avoid penalties, you'll still owe the full tax amount when you file. Having that money set aside now will save you from scrambling to find a large sum at tax time. Some people prefer making voluntary estimated payments just for cash flow management, even when not required. Make sure you have all your transaction records organized - dates, purchase prices, sale prices for everything. The IRS will want to see the details on Schedule D and Form 8949.

One aspect nobody's mentioned is health insurance. As a >2% S Corp shareholder, your health insurance premiums can't be paid pre-tax through the company like regular employees. Instead, the company pays them, includes them as taxable wages on your W-2, then you deduct them on your personal return. This gets complicated and can impact your overall savings calculations, especially if you're purchasing your own health insurance as a healthcare contractor. Also, retirement options change. SEP IRAs are simple as a sole proprietor, but S Corps often use Solo 401(k)s instead, which allow for potentially higher contributions but more paperwork. Consider these factors in your total cost/benefit analysis. The tax savings need to outweigh ALL the additional complexities.

Based on your $118k income and 28-hour work week, you're right at the threshold where S Corp benefits become marginal. Here's what I'd consider in your position: Your reasonable salary calculation of $53.8k (28 hours × $37/hour × 52 weeks) is defensible, but consider using annual hours instead of weekly estimates to account for time off. The IRS likes to see documentation showing how you arrived at your salary. At your income level, you'd save roughly $9,800 in SE tax on the $64k distribution portion, but after factoring in setup costs (~$2,000), ongoing expenses (~$3,000-4,000 annually), and your state's 5.5% corporate tax (~$6,500), your net savings would be minimal - maybe $0-2,000 annually. Given the administrative burden and your stable hourly income model, I'd suggest waiting until you're consistently earning $140k+ before making the switch. At that point, the math becomes more compelling and justifies the complexity. For now, focus on maximizing your SEP-IRA contributions (up to $29,500 for 2024) and other deductions available to sole proprietors. The S Corp will still be there when your income grows.

Does anyone know if you can transfer a 529 plan from a parent to a grandparent? My situation is backwards from most - I opened 529s for my grandkids but now their parents make more money than me and could benefit from the state tax deduction more than I can.

Great question! I went through this exact decision a few years ago with my kids. Definitely keep the 529 plans in your name (or yours and your wife's) with the twins as beneficiaries - don't put them directly in the kids' names. Here's why this matters for your situation: Since you mentioned being in a higher tax bracket, you'll want to maximize any state tax deductions available. Most states that offer 529 deductions only give them to the account owner, so having the plans in your names ensures you can claim those deductions. Also, for financial aid purposes down the road, parent-owned 529s are assessed at only 5.64% when calculating expected family contribution, versus 20% if the student owns the account. That's a huge difference that could affect aid eligibility. One more benefit - keeping ownership gives you flexibility. If one twin gets a full scholarship or decides not to go to college, you can easily change the beneficiary to the other twin or even use it for graduate school later. You maintain complete control over the funds until they're withdrawn for qualified expenses. The tax advantages (tax-free growth and tax-free withdrawals for education) are the same regardless of ownership structure, so there's really no downside to the parent-owned approach.

I've been using FreeTaxUSA for the past 3 years and it's WAY better than TurboTax or H&R Block. Federal filing is completely free and state is only $15. No hidden upgrades or confusing tiers of service. Just straightforward filing.

This is exactly why we need more people to know about these alternatives! I've been using the actual IRS Free File program for years (when I can find it buried on their website), but it's ridiculous that they make it so hard to locate. The fact that TurboTax was literally hiding their free version from search engines should be criminal. We're talking about a basic government service that every citizen needs, and private companies are deliberately making it harder and more expensive just to pad their profits. What really gets me is that my tax situation isn't even complicated - just W-2 income and standard deduction - yet I was paying $60+ every year before I found the free options. Multiply that by millions of taxpayers and you can see why these companies fight so hard to keep the system broken.

I work at an accounting firm and see this issue a lot. One thing nobody's mentioned yet - the IRS has been increasingly strict about documentation for charitable donations in recent years. If you get audited (which is still pretty rare for most people), they absolutely will ask for that acknowledgment letter for donations over $250. The PayPal receipt alone technically doesn't satisfy the requirement because it doesn't specify whether you received goods or services in exchange. My advice - if you absolutely can't get the proper documentation, and you decide to claim the deduction anyway with just the PayPal receipt, make sure you're at least keeping detailed records of your attempts to contact the charity. That shows good faith effort if there's ever a question.

That's great news that you were able to get through to the charity! It's always such a relief when these things work out. Staff changes definitely explain the delayed response - small nonprofits often struggle when they lose someone who was handling donor communications. For anyone else reading this thread who might be in a similar situation, this is a perfect example of why persistence pays off. Sometimes it really is just about timing and finding the right person to talk to. And having that proper acknowledgment letter will definitely give you peace of mind when filing - no worries about audit questions or having to justify your documentation later. Good luck with the rest of your tax prep!