17 How do you actually make these quarterly payments? I just started doing some freelance work and want to avoid a big surprise next year.

3 You can make quarterly estimated tax payments directly on the IRS website through their Direct Pay system at irs.gov/payments. Just select "estimated tax" as the payment type. You can also mail in payments with Form 1040-ES vouchers if you prefer paper. For figuring out how much to pay, the safest approach is to pay at least 100% of your previous year's tax liability divided into four equal payments (or 110% if your income is over $150,000). This gives you "safe harbor" protection from underpayment penalties even if your income increases.

9 Does the QBI deduction apply to all self-employment or only certain types of businesses? I do graphic design freelance work.

Thanks for the suggestions! Do you know if the booth rental option would require my roommate to do anything special with taxes throughout the year? They're worried about owing a huge amount at tax time if they go independent.

If they switch to booth rental (self-employed), they would need to make quarterly estimated tax payments. They'd pay both income tax and self-employment tax (which covers Social Security and Medicare). The benefit is they could deduct ALL their business expenses - not just supplies, but also a portion of their phone bill, mileage driving to buy supplies, art classes to improve their skills, even a home office if they do any work at home. These deductions often offset much of the self-employment tax increase.

Is it complicated to set up an LLC? I'm in a similar situation (hairstylist buying all my own stuff) and thinking about going independent, but all the business formation stuff seems intimidating.

Do you know if there's a minimum income threshold for filing 1040NR? I was only in the US for 2 months and made about $8,300.

For nonresidents on 1040NR, you generally must file if you engaged in business in the US during the year or had any US source income where the tax wasn't fully paid through withholding. For your situation with $8,300 in US income, yes, you would need to file regardless of the amount. Unlike residents who have filing thresholds based on standard deduction amounts, nonresidents typically must file even for small amounts of US source income. The only exception would be if you earned wages under the personal services exemption threshold in a tax treaty (which varies by country), but even then you'd usually file to claim the exemption.

Omg this makes so much more sense now! I've been so confused about which form to use as the "main" one for dual-status. So if I was nonresident until August and then became a resident for the rest of the year, I'd use 1040 as my main form with 1040NR attached as a statement?

Yes, exactly! Since you'd be a resident on December 31 (the last day of the tax year), your "main" form would be the 1040 with "Dual-Status Return" written at the top, and you'd attach a 1040NR as a statement for the part of the year you were a nonresident (January through July). The IRS looks at your status on the last day of the tax year to determine which form serves as the "main" one. It's one of those details that even some tax preparers get wrong if they don't regularly work with international clients.

That's great advice - I didn't even think to check if my university offers tax help! Do you know if there are any specific deductions that fellowship recipients should look into? I've heard mixed things about whether we can deduct research expenses.

Unfortunately, deductions for research expenses are very limited for students since the 2018 tax law changes. Previously, unreimbursed employee expenses could sometimes be deducted, but that's largely gone now. However, if your research is directly related to your degree requirements, some expenses might reduce the taxable portion of your fellowship. The key is whether they count as "required educational expenses" - if your program specifically requires certain research materials or activities that aren't covered by your fellowship, those might reduce your taxable amount. But general living expenses while doing research won't qualify.

Your roommate is probably only talking about the portion that covers qualified educational expenses (tuition, required fees, books). That part IS tax-free. But any scholarship or fellowship money that goes toward living expenses (room, board, travel, etc.) is taxable income according to the IRS. A lot of students don't realize this and end up with tax problems later.

So if I'm in a lower tax bracket now but expect to be in a higher one when I retire, should I do Roth instead? I'm trying to figure out which type of IRA makes more sense for my situation.

That's a great question and you've hit on one of the key considerations. If you expect to be in a higher tax bracket in retirement, a Roth IRA might make more sense because you pay taxes now at your lower rate, and then withdrawals are tax-free in retirement. Conversely, if you expect to be in a lower tax bracket in retirement, a Traditional IRA might be better since you get the tax deduction now at your higher rate, then pay taxes at your lower retirement rate when you withdraw. It's also worth considering that tax laws change over time, so having some money in both types of accounts (called "tax diversification") can be a prudent strategy.

Not all states treat IRA deductions the same way as the federal government though. Some states don't allow all deductions that the feds do.