That's a good point about the payment plans. I hadn't considered that they might be filing but just paying over time. About talking to my neighbor who runs the business, I'm honestly not sure how to bring it up without making it awkward. He's not a close friend, more of an acquaintance, and I don't want him to think I'm poking around in his business affairs.

If you're not comfortable talking to the business owner, that's understandable. These situations are definitely awkward. Maybe the best approach is to simply stay out of it then. The IRS has matching systems that will eventually catch up with them if they are indeed not filing or paying. If it really bothers you on a moral level, you could file that Form 3949-A that was mentioned earlier and let the IRS handle the investigation. That way you're not directly involving yourself or your neighbor in an uncomfortable conversation.

This is so true! I had a similar experience. I was a contractor for the first time in 2023 and had NO IDEA I needed to make quarterly estimated payments. Got hit with a huge tax bill plus penalties. The IRS payment plan interest rates are no joke either.

It's a painful lesson to learn! The tax system really isn't designed for people to easily understand, especially when transitioning from W-2 to 1099 work. The quarterly estimated payments catch so many people off guard. What's worse is that the longer someone goes without filing, the more intimidating it becomes to start. The fear of what you might owe can be paralyzing. I hope these women get proper tax advice before they dig themselves into a deeper hole.

Ugh that sounds like a headache. How do you even know how much to pay each quarter when your income is irregular?

It can definitely be annoying at first, but it gets easier. For irregular income, you have a couple of options. The simplest is to use the "safe harbor" provision - if you pay 100% of your previous year's tax liability (or 110% if your AGI was over $150,000), you won't face underpayment penalties even if you end up owing more. Alternatively, you can estimate each quarter based on actual earnings for that period. I use a simple method - I set aside roughly 30% of each 1099 payment I receive and make my quarterly payment from that. This usually covers both income tax and self-employment tax. If I overpay, I get a refund at filing time. There are also apps like QuickBooks Self-Employed that can track your income and automatically calculate your quarterly payments.

I hear so many people talk about home office deductions but I've always been told it's an audit red flag. Is it actually worth claiming?

What's the threshold where the IRS actually starts to care? Like, if I forgot to report $100 of income or something, would that trigger any issues?

There's no official published "we care at this amount" threshold, but in practice, the IRS typically doesn't pursue amounts that would change your tax by less than $50. This usually translates to around $200-500 of unreported income for most tax brackets. Remember though, intentionally not reporting income is different from making a small mistake. The best practice is always to report everything accurately, but occasional small errors won't result in any consequences. The IRS computer matching system will usually catch larger discrepancies automatically (like if you forgot to report a W-2 or 1099 that was submitted to them).

This makes me feel so much better! I've been having literal stress dreams about this tiny amount. Next year I'll be sure to double check all my investment accounts before filing!

Thank you for pointing that out! I wasn't aware of the difference between 1040 and 1040-NR for international students. Do you know if the education credits work the same way on the 1040-NR? I'm trying to figure out if I'd still get a refund from my 1098-T expenses.

The education credits work differently for nonresident aliens. If you were a nonresident alien for tax purposes (which most F-1 students are in their first 5 calendar years in the US), you would not be eligible for the American Opportunity Credit. However, you might qualify for the Lifetime Learning Credit depending on your specific situation. The Lifetime Learning Credit could still generate a refund, though it's generally less generous than the AOTC. Your eligibility also depends on whether your home country has a tax treaty with the US that specifically allows education credits. Some countries have provisions that make these benefits available while others don't.

Is the deadline different for international students? I heard something about special extensions for those on F-1 visas but not sure if that applies to refund deadlines or just filing requirements.

What about if you're divorced and alternate years claiming the child as a dependent? My ex claimed our daughter this year but I paid most of the daycare expenses. Can I still get the Child & Dependent Care Credit even though he claimed her?

That's a good question regarding divorced parents. The general rule is that the parent who claims the child as a dependent is the one eligible for the Child & Dependent Care Credit. However, there's an exception - if you're the custodial parent (child lived with you more than half the year), you can claim the credit for care expenses you paid even if you released your right to claim the child as a dependent to your ex. You would need to complete Form 8332 and make sure you're still eligible in other ways (like having earned income and paying for care so you could work or look for work). TurboTax should walk you through this specific scenario if you indicate your divorced status.

I switched from TurboTax to FreeTaxUSA two years ago and have been really happy with it. Their Child & Dependent Care Credit calculation has been spot-on for me. Plus, their interface actually shows you the form calculations so you can see exactly how they're determining your credit amount. And it's WAY cheaper!