I didn't know about first time abatement for state taxes! Do you know which states offer this? I've always filed and paid on time before this year.

Not all states offer it, but quite a few do. California, Illinois, Massachusetts, and New York are some of the larger states that have some version of penalty abatement for first-time issues. Some call it "reasonable cause" relief rather than first-time abatement. The key is to request it explicitly - they almost never offer it automatically. You typically need to have a clean compliance history for the past 3-4 years to qualify. The requirements vary by state, but it's definitely worth asking about when you call to set up your payment plan.

I did this last year. The penalties and interest only apply to the unpaid portion. So if you owe $1000 and pay $700 by the deadline, you'll only be charged penalties on the remaining $300. Definitely better than paying nothing by the deadline!

Thanks for this info! Do I need to wait until I've paid everything off before requesting the penalty abatement? And is there a specific timeframe I need to submit the form within?

You don't need to wait until everything is paid off to request penalty abatement. You can submit Form 843 after the penalties have been assessed, which typically happens after you file your return. There's generally a 3-year timeframe for requesting abatement, starting from when you filed the return or paid the tax, whichever is later. So you have some time, but I wouldn't procrastinate. It's usually best to set up your payment plan first and then submit the abatement request afterward.

The IRS calculator is good but I found it really confusing tbh. If you want something simpler, the tax withholding estimator on SmartAsset is more user friendly. Just google "smartasset tax withholding calculator" and it should come up.

Wait, so if I register as a freelancer in Dubai while studying, would I have to pay the corporate tax? How does the UAE distinguish between personal income and business income?

The UAE corporate tax applies to business income, not personal employment income. If you register as a freelancer in Dubai with a trade license, you could potentially be subject to corporate tax, but only if your annual revenue exceeds AED 375,000 (approximately $102,000 USD). The UAE tax authorities distinguish between personal and business income based on whether you're operating through a registered business entity. If you're simply employed by a company (even remotely) and receiving a salary, that's considered personal income and remains tax-free. The determination ultimately depends on how you structure your working arrangement in Dubai.

I went through this last year. Dubai student visas actually allow part-time work (up to 20 hours per week) with permission from your university. But for remote work for a company outside UAE, they don't actively monitor or restrict this since the employment relationship is outside their jurisdiction. Just make sure your primary purpose in Dubai remains education.

But isn't this exactly the kind of thing that could trigger an audit? I've heard horror stories about people getting flagged because their lifestyle or bank deposits don't match their reported income. How do you prove which deposits were personal once you're already being questioned?

The IRS generally flags returns based on statistical anomalies in the actual tax forms you file, not by comparing your bank deposits to your income. They don't have access to your bank records unless they're already auditing you for something else. If you do get audited, this is where documentation becomes important. Keep notes about personal deposits (text messages, emails about reimbursements, etc.), and maintain a separate ledger of business income with client names and invoice numbers. Even something as simple as a Google spreadsheet with notes about each deposit can be sufficient if the explanation is reasonable.

I've used it for 2 years and think it's worth it. The receipt scanning feature alone saves me hours of work, and it automatically categorizes most transactions correctly. The mileage tracker is also great if you drive for work. The tax filing integration makes quarterly estimated payments much easier too.

QB Self-Employed is decent but overpriced IMO. Try Wave Accounting - it's free for invoicing and accounting, and handles categorization pretty well. I switched last year and it does 90% of what QB does without the monthly cost.

Wait, I thought you only needed to file Form 709 if you exceed the annual exclusion? My husband and I gave our son $35,000 last year for his wedding and we didn't file anything. Did we mess up?

You're partially correct. If the total gift from both of you was $35,000 and you each contributed from your separate accounts (or you're in a community property state), then each of you gave less than the $18,000 individual annual exclusion, so no Form 709 would be required. However, if one spouse provided all the funds but you want to consider it as coming from both of you (to use both exemptions), then yes, you would need to file Form 709 to elect gift-splitting. This is a common misunderstanding. If the money came from a joint account or primarily from one spouse, you should technically file to properly split the gift. If you each wrote separate checks under the individual exclusion amount, you're likely fine.

I used TurboTax to file Form 709 last year and it was... not great. The gift tax portion feels like an afterthought in the software. It technically works, but the guidance was minimal and I wasn't confident I was doing it right, especially for the gift splitting election. If you're comfortable with tax forms and have a straightforward situation, it might be fine. But I ended up consulting with a tax pro anyway after attempting it myself, so I probably should have just started there and saved the headache.