How do you check if you're withholding the right amount? I always get really small refunds too and I'm never sure if that's good or bad.

The IRS has a tax withholding estimator on their website that's actually pretty accurate. You input your income, filing status, and other tax situations, and it tells you if you're on track. You can adjust your W-4 anytime with your employer if you want a bigger refund (more withholding) or more money in each paycheck (less withholding). Small refunds are technically better financially because you've had access to more of your money throughout the year instead of waiting for a refund. But some people prefer larger refunds as a form of forced savings.

It really depends entirely on how much was withheld from each paycheck though. You probably just had more withheld throughout the year.

True, withholding makes all the difference. My job tends to withhold a bit more than necessary. I also contribute to a traditional 401k which lowers my taxable income pretty significantly, forgot to mention that. That probably explains the difference between our refund amounts. Might be worth checking if you have any retirement contributions or other pre-tax deductions that could have been missed.

That's a really good point I hadn't considered. My Bitcoin interest is coming from a centralized exchange (just a basic interest account), but I also have some ETH in DeFi protocols. Do you think the source matters that much for potential wash-sale considerations?

The source could definitely matter. Centralized exchange interest accounts are pretty straightforward - they're clearly interest, similar to a bank account. DeFi gets murkier because sometimes you're technically swapping your asset for a derivative token (like depositing ETH but receiving aETH or similar). In traditional finance, if you exchange one security for another that's considered "substantially identical," it can still trigger wash-sale rules. So if crypto wash-sale rules get implemented, there might be questions about whether your original ETH and the derivative token you receive are "substantially identical" for tax purposes.

Actually, the Infrastructure Bill from last November did include some retroactive tax reporting requirements for crypto. So it's not impossible for them to do retroactive changes, especially for "clarifications" of existing rules rather than completely new taxes.

I had no idea about this rule! So if I stay on my HDHP through all of 2024, I can keep the full $3850 contribution for 2023, even though I only had coverage starting in May 2023? Do I need to indicate this somehow on my 2023 Form 8889?

Yes, exactly! If you had HDHP coverage on December 1, 2023, you qualify for the "last-month rule" and can contribute the full $3,850 for 2023 - as long as you maintain HDHP coverage for all of 2024. On Form 8889, you'll need to check the box on line 3 that says "If you, and your spouse if filing jointly, had an HDHP for the entire year, check the box..." This indicates you're using the last-month rule. You would then enter the full-year contribution limit on line 3. Just remember this comes with that testing period requirement - if you don't maintain HDHP coverage through December 31, 2024, you'll have to include the "excess" portion in your income for 2024 plus pay that additional 10% tax.

Yes, you absolutely need to file Form 8889, even with employer payroll deductions. Your tax software might not be prompting you because it doesn't know you have an HSA. You need to specifically tell it that you contributed to an HSA. Look for the section in your tax software about HSAs, health accounts, or tax deductions/credits. Once you indicate you have an HSA, it should generate Form 8889. The form is required for ALL HSA contributions and distributions, regardless of how they were made. Your W-2 should show HSA contributions in box 12 with code W if they were made through payroll.

I thought Solo 401ks were only for self-employed individuals without employees. Doesn't an S-Corp usually have at least the owner as an employee? Would this still work if the owner is the only employee?

You're right to question this - I should have been more specific. A Solo 401k can work for an S-Corp if the only employees are the owner (and potentially their spouse). If the S-Corp has any other W-2 employees who work more than 1,000 hours per year, then you'd need a regular 401k plan with non-discrimination testing. If OP only has themselves (and possibly their spouse) as employees, then the Solo 401k is still an option and could allow for higher contribution limits than a SEP IRA in many cases, especially when you consider both the employer and employee contribution components.

Not a dumb question at all, but with an S-Corp, the home office deduction works differently than for sole proprietors. The corporation should reimburse you for the home office expenses rather than taking them directly on your personal return. The S-Corp can deduct the reimbursement and it's not taxable income to you if done correctly.

Thanks for sharing your experience! Do you think it makes sense to form an S-corp right away when switching from single-member LLC to having employees? Or should I stay as an LLC taxed as a partnership first until I hit that $40-50k profit consistently?

I'd recommend staying as an LLC taxed as a partnership first until you're consistently hitting that profit threshold. You can always convert to an S-corp later, and it's much easier than going the other direction. The LLC with employees will still give you the liability protection you need, but with less administrative overhead. One thing I forgot to mention - with an S-corp, you must pay yourself a "reasonable salary" before taking distributions. The IRS watches this closely. For construction contractors, that's typically 60-70% of your profit as salary at minimum. So if your profits are tight or inconsistent, the S-corp advantages diminish since most of your income will need to be salary anyway.

This is so true. I undercharged for years and was always broke. When I finally raised my rates by 25%, I lost maybe 10% of clients but made WAY more money overall. And the clients I kept were the ones who respected my work and didn't nickel and dime me to death.