That's an interesting approach I hadn't considered! About how much do you typically underwithhold? And do you just make equal quarterly payments, or is there some calculation involved? I'm intrigued by the idea of having more control over our money throughout the year.

We typically underwithhold by about 15% of our total expected tax liability. For someone in your situation, that might mean underwithholding by around $30,000 total for the year, or $2,500 monthly that stays in your accounts instead of going to the IRS. The quarterly payments don't have to be equal if your income fluctuates, but we keep it simple and just divide our expected shortfall by 4. The payment due dates are April 15, June 15, September 15, and January 15 of the following year. You can make them online at the IRS website using Direct Pay or EFTPS. Just make sure you're meeting that safe harbor of 110% of your previous year's tax liability (since you're over the $150k AGI threshold). That's the easiest way to guarantee no penalties regardless of this year's actual liability.

I use it all the time and find it really accurate, but it's crucial that you include ALL income sources, not just your W-2 jobs. Make sure you're entering things like investment income, rental properties, etc. The other key is to update it quarterly since your situation might change throughout the year.

Is there any limit to how much you can take out after 65? And do you HAVE to take RMDs like with traditional IRAs? I'm trying to decide if I should just max my 401k or split between that and HSA.

There's no limit to how much you can withdraw after 65, and one of the best parts is that HSAs do NOT have Required Minimum Distributions (RMDs) like traditional IRAs. You can let the money grow as long as you want without being forced to withdraw it. That's why many financial planners recommend maxing out HSAs before even maxing 401(k)s beyond the employer match. The HSA is the only account that offers triple tax advantages: tax-deductible contributions, tax-free growth, and tax-free withdrawals for qualified medical expenses. Even using it for non-medical expenses after 65, it's at least equivalent to a traditional IRA.

Your dentist unfortunately gave you incorrect information. HSA funds generally cannot be used for dental insurance premiums either, as they fall under the same restrictions as health insurance premiums. The only exceptions are the ones already mentioned (unemployment, COBRA, over 65, or long-term care). However, you CAN use HSA funds for actual dental procedures and treatments that aren't covered by insurance! So while you can't pay the premium with HSA money, you can use it for copays, deductibles, and procedures that insurance doesn't cover or only partially covers.

Do you know if your CPA charged extra for handling the loan documentation? And did she suggest any particular format for the loan agreement? I'm trying to decide if I should do this myself or hire someone.

She didn't charge me extra since it was part of my regular tax prep service. The loan document was super simple - just a one-page agreement stating the loan amount, that there was no interest (since it was family), and the repayment terms. She said even a simple document is better than nothing. For deciding whether to DIY or hire someone, it really depends on how comfortable you are with taxes. If this is your only unusual situation and everything else is straightforward, you might be fine handling it yourself with some research. But if you have a complex return anyway, might be worth getting professional help.

I had this exact situation last year. The IRS sent me a letter asking about a discrepancy between reported income and the 1099-K amount. I sent them a copy of the loan agreement, bank statements showing repayment, and a brief explanation letter. They accepted it without further questions. Just document everything clearly!

Thanks for the suggestion! My AGI is about $48,000, so I should qualify. Do you know if the Free File version handles state taxes too? And will it cover nonrefundable credits and the student loan interest stuff without upselling me?

Yes, the Free File version will handle your student loan interest deduction without upselling you - that's the whole point of the program. Most Free File partners also include free state tax filing, though a few charge for state. The IRS page clearly shows which ones include free state filing. Since your AGI is $48,000, you'll qualify for every Free File option. Just make sure you access TurboTax (or whatever service you choose) through the IRS Free File portal link I shared, not by going to their website directly. If you go directly to their site, you'll get the commercial version with all the upsells.

Yep. Walmart usually has it for around $49 too. Way cheaper than buying directly from Intuit. Though I switched to FreeTaxUSA this year and paid $15 total instead of $45+.

That's reassuring to hear! Did you keep detailed mileage logs or just estimates? I have a general record of client visits but didn't track the exact odometer readings for every trip.

I keep a simple spreadsheet with the date, starting odometer, ending odometer, and purpose of trip. Nothing fancy. I also save my gas receipts and maintenance records as backup evidence of how much I'm actually driving. Even if your records aren't perfect, having something is better than nothing. The IRS knows most people aren't keeping NASA-level precise records. If you can show you made a good faith effort to track your business miles and that the total claimed is reasonable for your line of work, you should be fine.

This makes a lot of sense. I've always heard that claiming more than 80% business use is a red flag, but I guess it really depends on what you do for work. A traveling salesperson or consultant might legitimately use their car almost exclusively for business.