Does contributing to a 401k automatically reduce withholding or do I need to put that on my W-4 somewhere? My HR person was useless when I asked.

401k contributions automatically reduce your withholding because they reduce your taxable income before taxes are calculated on your paycheck. You don't need to put this on your W-4 specifically. However, if you have other deductions like mortgage interest, charitable giving, or student loan interest that aren't reflected in your paycheck, you can estimate their annual total and put that amount on line 4(b) of your W-4 to reduce withholding further.

I tried both and they were ok but seemed to be pushing their paid services. The IRS withholding calculator is completely free and actually pretty good if your tax situation is straightforward. Doesn't work well with irregular income tho.

Creating an IRS account is a nightmare though. I tried to do this last year and they wanted me to verify my identity by entering information from a mortgage, car loan, or credit card - none of which I had at the time! Ended up having to mail in a form and wait 10 days for a verification code.

That's a good point about the verification process. It can be difficult for some people to create an account. If you can't access your transcript online, calling the IRS transcript request line at 800-908-9946 is another option. They can mail your transcript to your address on record. The most important thing is confirming whether an extension or return has actually been filed under your SSN before worrying about potential identity theft or duplicate payments. This information can help determine your next steps.

I tried to pay about $2,700 which was what TurboTax estimated I would owe based on the information I entered so far. I understand extensions only give more time to file, not pay - that's why I attempted to submit the payment with my extension request. I'm just worried about where that money went since the extension was rejected!

This is such an important point that people miss! I've seen so many friends get hit with penalties because they thought filing an extension meant they didn't have to pay until October. The interest and penalties on unpaid tax can add up fast - I think it's something like 0.5% per month plus interest.

That $3000 limit is so outdated. It's been the same since 1978! With inflation that would be about $13,500 today but congress never bothers to update it. Typical.

Thanks for this info! Just to clarify, my total from all the trial work was about $540 for the year. Does that mean I definitely have to pay the self-employment tax? And is Schedule C-EZ still available? I thought I read somewhere that the IRS discontinued it a few years ago.

Since your total is over $400, you would need to pay self-employment tax on that $540. It's 15.3% which comes out to about $82.62 in additional tax. You're right about Schedule C-EZ - I apologize for the confusion. The IRS did discontinue it after 2019. You'll need to use the regular Schedule C, but with such a straightforward situation and minimal income, it shouldn't be too complicated. Just list each payment as income and any legitimate expenses you had related to earning that income.

Technically you're supposed to report all income regardless of the amount or whether you received a tax form. But realistically speaking, the IRS isn't likely to audit someone over $300. They typically focus on much larger discrepancies. That said, if you're ever audited for other reasons, they could discover this unreported income. Your call, but personally I report everything just to avoid potential headaches later.

Thanks for mentioning the VCSP program. I'll definitely look into that along with Schedule H. Would you recommend I also file the SS-8 form, or is that something my babysitter would need to do? And do I need to worry about state taxes too, or just federal?

The SS-8 form is typically filed when there's a dispute about worker classification. Since you both agree she's a household employee, you probably don't need to file it. It's more important to focus on the Schedule H and getting caught up on the employment taxes. Yes, you absolutely need to look into state taxes as well. Most states have their own version of unemployment taxes for household employers, and the thresholds can be different from federal requirements. Check with your state's employment department as soon as possible, as they may have separate filing requirements and potential penalties.

Would the Child and Dependent Care Credit still apply if the babysitter was watching my sister's kids at my house? I paid her but they weren't my dependents.

No, the Child and Dependent Care Credit only applies if you're paying for care for your own qualifying dependents (your children under 13 or disabled dependents/spouse). If you were paying for childcare for your sister's children and they aren't your dependents, you can't claim the credit. Your sister might be able to claim it though, if she can document that she reimbursed you for the childcare expenses and meets the other requirements for the credit.