Ugh I didn't even think about state taxes. Do you know if I need to do those in any particular order? Like should I finish all the federal returns first?

You can work on them simultaneously, but it often helps to do the federal returns first since most state returns use information from your federal return as a starting point. Some states have voluntary disclosure programs that might reduce penalties if you come forward before they contact you. Check your state's tax website or call them directly - in my experience, state tax agencies are actually easier to reach than the IRS and can be surprisingly helpful.

Did you get hit with a ton of penalties? That's what I'm most worried about - that the penalties will be more than the actual taxes.

I used FreeFile last year for my side gig. It worked fine for basic self-employment stuff but doesn't offer much guidance. If you already know which forms you need and how to fill them out, it works. But don't expect it to catch mistakes or suggest deductions you might have missed.

Oh thanks for bringing that up! I'm 22 and I was planning to file as independent since I'm supporting myself with part-time work and student loans, but I should probably check with my parents first. Would that change how I report the 401k withdrawal specifically?

Being claimed as a dependent doesn't change how you report the 401k withdrawal itself - you'll still need to report the 1099-R information regardless. However, it could affect your overall tax situation, including things like education credits that might be more beneficial for your parents to claim rather than you. If they're claiming you, communication is key so you don't accidentally claim credits or deductions that they're entitled to on their return.

FreeTaxUSA is great, I used it too! Just make sure you answer the questions carefully about WHY you took the withdrawal - that part determines if you qualify for any penalty exceptions.

Thanks for sharing this! Do you remember how long it took after you filed the missing year for them to release your refund? And did you end up owing anything for the year you missed?

It took about 3 weeks after I submitted the missing return for them to release my refund. I actually ended up with a small refund for the missed year too, so they combined them. I did get hit with a failure-to-file penalty though, even though I was due a refund. It wasn't huge but still annoying - I think it was the minimum penalty amount. The letter explained that the penalty applies for filing more than 60 days after the due date, even if you're owed money.

How do you get that transcript thing? Is it online or do you have to call them?

You can get it online through the IRS "Get Transcript" tool on their website. You'll need to create an account if you don't already have one, and they have a pretty strict verification process with multiple authentication steps. If you can't verify your identity online (which happens a lot), you can also request it by mail using Form 4506-T. That takes about 10 days to arrive. The transcript will show all income documents that were reported to the IRS under your SSN for that tax year.

Can you use per diem for just some trips and actual receipts for others? Or once you choose a method, do you have to stick with it for the whole year?

You can absolutely mix methods throughout the tax year. You can use per diem for some trips and actual receipts for others. The only requirement is consistency within each individual business trip. So, for a 3-day convention in Chicago, you need to use either per diem OR actual receipts for that entire trip - you can't switch methods mid-trip. But for your next event in a different city, you could use the other method.

Client meals are still subject to the 50% limitation. There's no specific dollar limit per person, but deductions need to be "reasonable" in the eyes of the IRS - so a $500 meal for one client might raise eyebrows during an audit. Make sure you document the specific business purpose of these meals, who attended, and what business topics were discussed. Without that documentation, the IRS could disallow the entire deduction, even the 50% portion.