Do you need receipts for all business expenses? I'm terrible at keeping track of that stuff but don't want to miss out on deductions.

Yes, you should keep receipts for all business expenses. The IRS requires documentation to support deductions in case of an audit. It doesn't have to be paper receipts though - digital records work too. I use a combination of a dedicated credit card for business expenses (the statements serve as records) and a simple spreadsheet where I log expenses and note where the receipt is stored. For smaller items under $75, the requirements are a bit less strict, but I still recommend tracking everything.

Better to overwithhold than underwithhold and get hit with penalties though. I learned that the hard way last year.

That's a really interesting point about tax credits! I don't think we've explored that angle. He pays child support but doesn't have custody, so I'm not sure what credits might apply in his situation. Are there specific ones you know of that might help? And good point about the Roth 401k - I'm pretty sure he's in the traditional one but I'll definitely mention that option to him.

If he pays child support, he should look into whether he qualifies for the noncustodial parent earned income credit in his state (some states offer this). While he won't qualify for the federal EIC without claiming the child, he might be eligible for other adjustments. For the 401k, Traditional reduces his taxable income now but taxes later, while Roth is taxed now but tax-free later. If he's in a lower tax bracket now than he expects to be in retirement, Roth often makes more sense. Either way, remind him that his 401k contribution percentage might need to be adjusted if he switches types to maintain the same take-home pay.

The IRS calculator is definitely hit or miss. It works okay for people with very standard situations (one job, no deductions beyond standard, no credits) but fails for anything remotely complex. I've had better luck with some of the calculators built into tax software like TurboTax's W4 helper, but even those aren't perfect.

Thanks for this suggestion! I just checked and the names do match on both forms in the software. It seems like the issue is definitely with the IRS database having my old name linked to the EIN. I think I'm going to try contacting them directly as suggested and see if I can get this fixed. Just curious - have you ever encountered this specific rejection code before?

I've seen this rejection code several times with clients who had name changes. It's specifically related to the EIN registration in the IRS system not matching what's on your current tax return. The W-3 tip sometimes helps, but in your case it does sound like an IRS database issue. The good news is that it's usually a quick fix once you get someone on the phone. Just be sure to have your EIN handy when you call, along with your SSN and your previous name. They might ask for verification of the name change too (marriage certificate), though usually just confirming your identity is enough for them to update the system.

This is terrible advice. MFS usually results in a much higher tax bill and you lose a bunch of credits. Just paper file if you have to - it's annoying but better than paying hundreds or thousands more in taxes.

That's interesting, I've never heard of "statutory employee" before. I'll definitely check box 13 when I get my W-2. Do you know if cable/internet installers typically fall into this category? The job involves driving to different houses throughout the day to install equipment.

Cable/internet installers can sometimes qualify as statutory employees, especially if you're paid on commission or job completion rather than hourly, and if you're responsible for your own expenses. The key factors are usually: 1) you personally provide the service, 2) you don't have a substantial investment in equipment, 3) you have a continuing relationship with the company, and 4) you don't have significant profit/loss risk. If box 13 is checked, TurboTax will walk you through a Schedule C where you can deduct all those gas receipts and tools. Just make sure you're tracking mileage as well as receipts - the standard mileage deduction is often better than actual gas expenses.

This is actually really good advice. I did the same thing. Paid a CPA about $300 the first year I had contractor income, then just copied the format in TurboTax the next year. Saved me so much stress about doing it wrong!

Can you explain what exactly needs to be filled out on Form 2441? My preparer is insisting I don't even need to file this form since I'm not eligible for the credit. Should I be concerned?

Your preparer is definitely wrong. If you have a Dependent Care FSA, you MUST file Form 2441 regardless of your filing status or eligibility for the credit. For Form 2441, you need to complete Part III specifically. Line 12 should show your FSA contributions (this amount is often shown in Box 10 of your W-2). You'll work through the form, and even though you won't qualify for the credit as an MFS filer, completing Part III correctly ensures your FSA contributions remain pre-tax. Lines 18 through 24 are critical for properly accounting for the benefits. If your preparer skips Form 2441 entirely, your FSA benefits could incorrectly become taxable income.

Is there a specific certification or experience level I should look for? My current guy has been doing taxes for 20+ years but still got confused by my FSA situation when filing separately.