What if you've already maxed out all retirement accounts? Any other straightforward strategies that don't involve loans?

If you've maxed out traditional tax-advantaged accounts, there are still several options worth considering. Look into 529 plans if you have education expenses for yourself or family members. Many states offer tax deductions for contributions. Charitable giving is another straightforward strategy - donating appreciated securities can be especially efficient as you avoid capital gains tax and get the deduction. Tax-loss harvesting in your investment accounts can offset capital gains. If you're a business owner or have self-employment income, you might qualify for a SEP IRA or Solo 401k with much higher contribution limits than standard retirement accounts.

Yes, portfolio loans/margin loans can be tax-efficient. Interest is potentially deductible as investment interest expense (subject to some limitations - you can only deduct up to your net investment income). The big advantage is avoiding capital gains tax and not disrupting your investment strategy. Just be careful about margin calls if the market drops.

Do you happen to know if you can get the first-time penalty abatement if you've filed late before but always paid on time? My situation is the opposite - I've always filed on time, but this is the first year I can't pay what I owe right away.

Yes! That should actually work in your favor. The first-time penalty abatement typically looks at your compliance history for the past 3 tax years. If you've filed on time and paid (or arranged to pay) all taxes due for those years, you would likely qualify even if you had filing issues before that three-year window. In your situation, where you've always filed on time but now have a payment issue, you have an excellent chance of getting the failure-to-pay penalty abated. You'll need to call the IRS and specifically request "first-time penalty abatement" after you've set up your payment arrangement. Just explain that you've always been compliant but had an unusual financial hardship this year.

Absolutely still file now! When you e-file, you're not required to make a payment at the same time. You can submit your return showing the amount you owe, and then make arrangements to pay later. If you'll be able to pay in full within about 120 days, you can apply for a short-term payment extension through the IRS website. There's no setup fee for this option, though interest and the failure-to-pay penalty (the smaller 0.5% monthly one) will still apply. If you need longer than 120 days, that's when you'd want to set up a formal installment agreement.

Thank you so much, that's a huge relief! I was stressing about this for weeks. I'll definitely e-file this weekend and then look into the 120-day extension since I should be able to pay by then. Really appreciate the clear explanation!

Thank you for breaking it down so simply! So just to double check, since I'm only working this regular job where they take taxes out of my paycheck, I really just need to worry about filing my return by April 15th each year? And then I use the W-2 form my work sends me to do that?

Exactly right! Since you have a regular job with taxes being withheld from each paycheck, you only need to file once a year by April 15th. Your employer will send you the W-2 form you need (usually by end of January), and you'll use that information to file your return. The whole process is pretty straightforward for most employees. You can use free tax filing software if your situation is simple, which it sounds like it is. The software will walk you through entering the information from your W-2 and ask some basic questions to make sure you get any credits or deductions you qualify for.

VITA was awesome when I first started working! The volunteers are usually retired accountants or tax professionals who really know their stuff. Just make sure to book early because appointments fill up fast in March and April.

This sounds perfect for me! I'll definitely look into VITA - having someone walk me through it the first time would be so helpful. Thanks for letting me know about this option!

Thanks for this! I do have a dedicated office space in my apartment. How exactly does the home office deduction work? Is it a percentage of my rent or something else?

Exactly right - it's based on the percentage of your home used exclusively for business. So if your apartment is 1000 square feet and your office is 100 square feet, you can deduct 10% of your rent, utilities, internet, etc. TurboTax will walk you through the calculation. Just make sure the space is truly used exclusively for business - that's the IRS requirement. If you also use that room for guests or as a TV room, it won't qualify. Take pictures of your setup as documentation just in case.

I've used both for my consulting business. TurboTax Self-Employed is more user-friendly and has better expense tracking features. H&R Block is a bit cheaper but doesn't explain things as clearly for first-timers. If you're not super tax-savvy, I'd go with TurboTax. Worth the extra $20-30 for the clearer guidance, especially in your first year.

Thanks for the comparison! User-friendly is definitely what I need since I'm clueless about all this. Will go with TurboTax Self-Employed then. Appreciate it!

Thanks for mentioning this! I notice there's also a section for "Fed MWT" with its own YTD column. I'm guessing that's federal withholding, right? Is that something we should be paying close attention to?

Yes, "Fed MWT" stands for Federal Mandatory Withholding Tax (sometimes just called federal income tax withholding). This is definitely something you should monitor carefully! This represents the federal income tax being withheld from each paycheck and sent to the IRS on your behalf. The YTD total for this column shows how much has been withheld for federal taxes so far this year. When you file your tax return, this amount will be compared against your actual tax liability to determine if you get a refund or owe additional taxes. If the YTD withholding seems too high or too low based on your expected tax situation, you can adjust it by submitting a new W-4 form to your husband's employer.

And Social Security has that annual wage base limit too ($160,200 for 2023, will be different for 2025), so once you hit that in the YTD earnings, you should stop seeing Social Security tax taken out of the remaining paychecks for the year. Medicare doesn't have a cap though.