Do you know if the safe harbor is calculated on total tax liability or just income tax? Like does it include the self-employment tax portion too when figuring the 100% or 110% of last year's taxes?

The safe harbor amount is based on your total tax liability, which includes both income tax and self-employment tax. So when people talk about covering 100% (or 110% for higher incomes) of last year's tax, they're referring to the total amount on line 24 of your Form 1040 from last year - that's your total tax, including self-employment taxes. That's why self-employment income can really complicate things, because you're responsible for both the employee and employer portions of Social Security and Medicare taxes, which adds about 15.3% on top of your regular income tax.

That's a great tip! I didn't realize you could adjust Social Security withholding too. Is there a limit to how much you can withhold from Social Security benefits specifically?

Thanks for bringing this up! I do have a shared laundry area in the garage that we both use. How exactly did you calculate the usage patterns? Did you just estimate or is there a more formal way to track this?

I created a simple log for a few weeks to track usage of shared spaces. Nothing fancy - just noted when the tenant used the laundry room versus when I did. Then I calculated a percentage based on that sample period. My accountant said this was sufficient documentation if ever questioned. For spaces like hallways and entryways, we based it on the overall rental/personal ratio of the exclusive-use areas. So if your exclusively rental areas are 40% of the total exclusive-use space, you'd allocate 40% of the shared hallways/entryways to rental use. That seemed to be acceptable to my accountant, who specializes in rental properties.

Did you have to get permission from your utility company to install separate meters? I'm thinking about doing this but wasn't sure if it's worth the hassle.

Thanks so much for the tips! I'll definitely use a dark background and make sure to get that EIN number clearly. That might be why my dad's concerned - he's pretty old school about financial stuff and doesn't really trust anything digital. Do you think if I use the H&R Block app to take the photo it'll be better than just using my regular camera app?

Using the H&R Block app to take the photo is definitely better than using your regular camera app. The tax app is specifically designed to capture tax documents with the right angle, lighting guidance, and it will immediately check if the photo is usable for processing. It also keeps the image within their secure environment rather than storing it in your general photo gallery where other apps might have access to it. Your dad's concern is understandable - many people from earlier generations are cautious about financial documents, and rightfully so. You might ease his mind by explaining that the H&R Block app uses encryption to protect your data, and that digital submission is actually the standard method now, even preferred by the IRS.

This happened to me too! The software mixed up box 1 and box 3 amounts from my photo. Worth taking 2 extra minutes to verify everything before submitting.

That's a perspective I hadn't considered. Did you use tax software to file for them or do the paper forms? And did they actually participate in the process or did you just do it for them?

I used free tax software for their simple returns. The first couple years I walked them through it with me sitting next to them, explaining each step. By age 16-17, they did it themselves with me just reviewing after. It was definitely worth it. My 19-year-old now understands tax concepts better than most adults I know. She can explain her withholding, knows which deductions she qualifies for, and even helped her roommate file this year. The investment account discussions led to broader financial literacy too - she's already putting money in a Roth IRA from her campus job.

Wait, you lose the child tax credit if you report their investment income on your return? That's a huge deal that I've never heard mentioned before! Is that always the case or only in certain circumstances?

This is really helpful to know. Did they at least help reduce the amount you owed at all? Or was it literally just setting up the payment plan?

Literally just set up a standard payment plan. When I first called, they made it sound like they could potentially get my tax debt reduced through an Offer in Compromise. But after I paid their initial fee, they came back and said I didn't qualify for that (which I could have figured out myself using the IRS pre-qualifier tool). The worst part was how they dragged everything out. What should have taken maybe 2-3 weeks took over 3 months, all while penalties and interest continued adding up. They claimed this was "part of the process" but I think they were just juggling too many clients with too few staff.

Thank you so much for this insight! After reading all these comments, I'm definitely going to stay away from the big national companies. I think I'll try the DIY route first using the tools mentioned here, and if I get stuck, I'll look for a local EA or CPA. Any specific red flags I should watch out for when talking to local tax pros?

You're making a smart choice! The biggest red flags to watch for with local tax pros are: 1) Anyone who promises they can settle your debt for "pennies on the dollar" without reviewing your full financial situation first. Legitimate professionals know that IRS acceptance rates for major reductions depend entirely on your specific circumstances. 2) Professionals who won't provide a clear, written fee agreement before starting work. Reputable tax pros will outline exactly what services they'll provide and what they'll charge, with no surprises. 3) Someone who seems unfamiliar with Form 433-A/F (Collection Information Statement) or Form 9465 (Installment Agreement Request). These are fundamental forms for tax resolution that any qualified pro should know inside and out. Good luck with your DIY approach! The IRS website is actually quite helpful for setting up standard payment plans.