I didn't even think about state requirements! Do you know if most states follow the same quarterly schedule as the federal one, or is it completely different?

Most states do follow the federal quarterly schedule (April 15, June 15, September 15, January 15), but there are definitely exceptions. California, for example, doesn't have a January payment but requires higher percentages for the earlier payments. The income thresholds for when you need to start making estimated payments can also vary by state. In some states, you might need to make estimated payments at a lower income level than federal requirements.

30% seems high. I've been doing 25% and that's been more than enough. Guess it depends on your tax bracket and state though.

This is such a good point! The exact same situation applies to us - the student loan savings from filing separately FAR outweigh the tax benefits of filing jointly. It's absolutely worth calculating both ways. Also worth noting that if you're on PSLF (Public Service Loan Forgiveness), filing separately can dramatically reduce your required payments while you're working toward forgiveness, which is basically free money if you're going to get the loans forgiven anyway.

Thanks for the professional perspective! I didn't even think about how this could change year to year. So basically I need to run the numbers both ways each tax season to see which is better for our specific situation? Is there a quick way to estimate which might be better without doing the full tax return twice? Maybe some rules of thumb about when separate filing tends to be better?

Yes, calculating both ways each year is the safest approach since tax laws and your financial situation both change over time. For a quick estimation, separate filing tends to be more beneficial in these specific scenarios: 1. When one spouse has medical expenses exceeding 7.5% of their individual AGI (but not of joint AGI) 2. When income-based student loan repayment is involved (as others mentioned) 3. When one spouse has significant miscellaneous itemized deductions 4. When you want to keep tax liability separate (e.g., concerns about tax debt or refund offsets) 5. When one spouse qualifies for certain income-based benefits that would be lost with combined income Most tax software has a "what-if" scenario tool that lets you compare filing statuses without recreating the entire return. It's usually just a few clicks to see the difference, and it's absolutely worth checking every year.

5 Would the accountant be liable for any of the penalties since they're the ones who made the mistake? I'm dealing with something similar where my accountant completely missed reporting my crypto transactions.

19 The accountant generally wouldn't be directly liable to the IRS for the penalties, as the ultimate responsibility for tax compliance falls on the taxpayer. However, you may have a potential claim against the accountant for professional negligence or malpractice. For your crypto situation, that's a bit different. Cryptocurrency reporting requirements have evolved rapidly, and there's been some confusion among tax professionals. Still, if your accountant knew about your crypto transactions and failed to report them properly, you should document this thoroughly when requesting abatement, and consider whether their error rises to the level of professional negligence.

1 That's really helpful! I'll definitely look into Revenue Procedure 84-35. Does this apply even if we technically filed Schedule C forms instead of partnership returns? All of our income was definitely reported on our personal returns - we paid all the taxes we owed, just on the wrong forms apparently.

Do you have any thoughts on the ideal income level where C Corp makes more sense? I've heard different thresholds from different advisors.

The income threshold where a C Corporation becomes more advantageous varies based on your specific situation, but generally, C Corps tend to make more sense when business income exceeds $300,000-$400,000. At that level, the corporate tax rates and ability to retain earnings for growth often outweigh the double taxation concerns. However, it's not just about income level. You should also consider your growth plans, whether you need to retain significant earnings in the business, plans for raising capital, and your personal financial situation. If you're planning to reinvest most profits back into the business rather than distributing them, a C Corp structure can be beneficial even at lower income levels since those retained earnings aren't being double-taxed.

I did exactly this - formed a Wyoming C Corp while living in NY. You need to be aware of "doing business" rules - you'll likely need to register as a foreign corporation in your home state anyway and potentially pay taxes there. The privacy benefits remain, but you don't escape state taxation where you're physically located and working.

That's interesting! So if I stop using the room as an office and just use it as a normal bedroom or something for 2 years before selling, would that fix the problem completely? What about the depreciation I've already taken in previous years?

Converting back to personal use can help with future capital gains treatment, but unfortunately any depreciation you've already taken will still need to be recaptured when you sell. That's unavoidable. The good news is that only applies to the actual depreciation you claimed, and only for the period you claimed it. So stopping the home office deduction now won't erase past depreciation, but it prevents you from creating more tax liability going forward.

Does this really make a big difference? And what about regular maintenance stuff like painting or fixing things that break? Can those count too?