Thanks for all the helpful responses, everyone! I went ahead and started the EFTPS enrollment process yesterday after reading through these comments. @Abby Marshall - that 8PM deadline tip is super important, I had no idea about that! I was planning to pay on the actual due date which would have been a disaster. I'm also going to look into taxr.ai since a few people mentioned it helped clarify the process. It sounds like it could save me from making mistakes in the future. For now, since I'm cutting it close to my deadline, I might use the credit card payment option through one of those third-party processors just to be safe, even with the fee. One more question - does anyone know if EFTPS sends email confirmations for payments, or do I need to print/save something from their website when I make the payment?

New business owner here too! I just went through this exact same confusion with my freelance consulting LLC a few months ago. What really helped me was understanding that the IRS website is mainly for information and forms, while EFTPS is where you actually make the payments - they work together, not separately. One thing I wish someone had told me earlier: when you're enrolling in EFTPS, you can actually start the process online but they'll mail you a PIN to your business address (not your home address if they're different). Make sure your business address is correct in all your IRS paperwork or it can delay the whole process. Also, once you get set up with EFTPS, you can schedule payments in advance for all your quarterly dates at once, which is really convenient. I set up all four of my 2024 quarterly payments back in January and it's one less thing to worry about each quarter. Good luck with your photography business! The tax stuff gets easier once you get through the initial setup confusion.

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.

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!

7 Stupid question maybe - but why do we even have different rates for short vs long term gains? Seems needlessly complicated.

The different rates also help account for inflation over longer holding periods. When you hold an investment for several years, some of your "gain" is just due to general price increases in the economy, not real investment growth. The lower long-term rate partially compensates for this inflation effect. Additionally, there's an economic argument that capital gains shouldn't be taxed as heavily as ordinary income since the money used to make the investment was likely already taxed when it was earned as wages or business income. The preferential rate recognizes this "double taxation" aspect. For your specific situation with $7,500 short-term and $12,300 long-term gains, you'll save about $861 in taxes compared to if everything were taxed as ordinary income (22% vs 15% on the long-term portion). That's a pretty significant benefit for holding those investments over a year!