Wait, I need to pay taxes NOW on this? I was planning to just handle it when I file next year. How do I figure out how much to pay for these quarterly payments? And does it matter that I won the money halfway through the year?

For estimated tax payments, you have a couple of options. The simplest approach is to calculate roughly 30-35% of your winnings (depending on your tax bracket) and make a payment ASAP using the 1040-ES form. The fact that you won it midway through the year does matter - estimated payments are generally due quarterly, with the deadlines being April 15, June 15, September 15, and January 15 of the following year. If you've already missed some of these deadlines, don't panic. Making a payment now is better than waiting until you file. Alternatively, you could increase your withholding at your regular job for the remainder of the year by filing a new W-4 with your employer, which might be enough to cover the additional tax liability and help you avoid underpayment penalties.

This is super important - my buddy got absolutely wrecked because he didn't track his cost basis properly when converting gambling winnings from crypto to USD. The IRS assumed the entire amount was profit and taxed him accordingly. Took him months to sort out the documentation to prove otherwise.

That's a really good tip about certified mail! I did use TurboTax for my original return but filled out the amendment on paper since I heard that's the only way to do it. Is there any way TurboTax would still have tracking info even though I mailed a paper form?

Unfortunately, TurboTax won't have tracking info for a paper-filed amended return that you completed outside their system. Their tracking only works when you prepare and file the amendment through their service. While the 1040-X must be submitted on paper, TurboTax can help prepare it and provide tracking based on typical processing times. For your current situation, certified mail would have been ideal, but for the future, consider preparing your amendment through the same tax software you used for the original return, as they'll provide better guidance and typically more accurate status information based on aggregated processing data from their user base.

Try checking your IRS account transcript online instead of just the amended return tool. Sometimes the transcript will show that they received your amendment before the specific tool updates. Look for a code 971 or 977 on your account transcript - that often indicates they've at least received and started processing your amended return.

Thank you for this advice. What kind of documentation would show the mom acknowledges the living arrangement? We don't have anything formal since we never went to court over custody.

Text messages or emails where she mentions or confirms the living arrangement can work. If you have any written communication where she acknowledges the child lives with you most of the time, save it. Social media posts can sometimes help too. Child support payments (if you receive any) can also establish the arrangement. If she listed you as a contact on school or medical forms, that's also useful. Even if you don't have a formal custody agreement, building a paper trail of everyday life showing you're the primary caregiver can be very convincing to the IRS.

With TurboTax, select "Other eligible dependent" or sometimes they have an option like "Not related but member of household." Then it'll ask if they lived with you for more than half the year - make sure to say yes. It'll calculate the correct credit for you. I've done this for years with my partner's kid.

That's a helpful breakdown. I didn't realize all those different taxes added up like that. My state tax is about 5% and I am contributing 3% to the company 401k (they match it). I think there's also a small city tax where I live. But even accounting for all that, when I calculate it out, it still seems like my federal withholding specifically is too high compared to what my actual tax rate should be. I'll definitely check my W-4 like others suggested.

You're on the right track! The 401k contribution is actually helpful tax-wise because it reduces your taxable income, but it does decrease your take-home pay temporarily. The good news is you're getting that company match, which is essentially free money for your future. The combination of your state tax, city tax, FICA taxes (Social Security and Medicare), and federal withholding can definitely add up quickly. Definitely check that W-4 form - it's the most common reason for overwithholding. Many people don't realize that the default withholding often assumes you'll be making that same amount for the entire year, which can lead to higher withholding if you haven't worked the full year yet.

That's exactly what happens! Payroll systems typically calculate your withholding as if each paycheck represents your normal pay for the entire year. So if you suddenly get a bigger paycheck, the system thinks "oh this person is now in a higher tax bracket" and withholds accordingly. The same thing happens with bonuses or overtime - they get withheld at a higher rate. The good thing is it usually balances out when you file your taxes, and you get the excess back as a refund.

Does the holding period reset if the company does another round of funding? My startup is talking about a Series C next quarter and I'm worried it will mess up my holding period on shares I exercised last year.

No, funding rounds don't reset your holding period. The clock starts ticking from your exercise date (when you purchased the shares) and continues regardless of additional funding rounds or company events. What can affect things is if the company does a reorganization where shares are exchanged for new ones in a different entity - but that's relatively rare and typically happens in acquisitions, not standard funding rounds. Your original exercise date from Form 3921 remains the key date to track for tax purposes.

In FreeTaxUSA, you'll need to look under "Income" and then "Other Income." They don't have a specific ISO section, but you calculate the AMT adjustment manually and enter it in the AMT section under "Adjustments and Preferences" > "Other AMT Adjustments." It's a bit more work than TurboTax but definitely doable.