Does this actually work? I'm starting DoorDash on weekends but have a full-time office job. How do you calculate the right amount of extra withholding?

Definitely works! I've been doing it for 3 years with no problems. To calculate the right amount, I estimated I'd make about $15,000 from Uber for the year, which would be roughly $3,750 in total taxes (25% is a safe estimate for self-employment tax plus income tax). Then I divided that by how many paychecks I get annually (26 bi-weekly ones), which came to about $144 per paycheck. I rounded down to $75 per check because I knew I'd have some deductions for mileage. You can adjust your withholding by submitting a new W-4 form to your employer's HR department. Just put the additional amount you want withheld on line 4(c).

Whoa, didn't even think about that! Which tax software are you using? I'm wondering if mine warned me about this and I missed it.

That's a really good point I hadn't considered. How would I check if my software is using the most current tax rules? Is there some version number or update date I should look for?

Most tax software will show the tax year version somewhere in the settings or about section. Look for something that says "Tax Year 2025" or "Updated for 2025 tax law changes." Some will even show the specific update date. If your software offers a way to view the actual IRS instructions they're using for calculations, that can help too. The most reliable way though is to check the preview of Schedule 8812 from both software programs - they should both reference the same tax year and use identical calculation methods for the Child Tax Credit.

The IRS calculator is decent but it doesn't handle some of the more complex situations. I'd also suggest running the numbers quickly through a third software like Cash App Taxes (formerly Credit Karma Tax) which is completely free regardless of income. Having a third calculation might help show which of your current ones is more likely correct.

What kind of penalties are we talking about if someone gets audited and the IRS rejects their claim? Is it just paying back the money or are there additional fines?

If the IRS determines an ERC claim was improper, they can require repayment of the full credit amount plus interest (which is currently at a high rate). In cases where they determine the claim was recklessly or intentionally improper, they can also assess accuracy-related penalties of 20% or even fraud penalties of 75% of the underpayment. There's also the cost of defending an audit, potential damage to banking relationships if a large repayment is suddenly required, and the business disruption of dealing with an extended examination.

Thanks for sharing this - this is exactly what I'm worried about. I keep trying to explain the risks to my client but he only sees the dollar signs and not the potential consequences. Did your brother's business have any specific government orders that restricted their operations, or was it purely the "supply chain" angle that the ERC company used?

He had to close for about 3 weeks in early 2020 like most retail, but reopened with masks/distancing requirements. The ERC company focused mainly on "supply chain disruptions" claiming his inability to get some inventory items qualified as a partial suspension. The IRS disagreed completely. Their position was that since his overall revenue increased and he found alternative products to sell, he clearly wasn't significantly impacted in a way that qualified. The business had its best year ever during COVID because people were shopping locally instead of at malls.

How does either handle QBI deductions from the rental properties? That's been a confusing part for me when deciding which software to use.

TurboTax handles QBI deductions pretty seamlessly. When you enter your rental information on Form 8825, it automatically determines if your rental activities qualify as a trade or business for QBI purposes. It asks specific questions about time spent, services provided, and other factors to make the determination. TaxAct also calculates QBI but the interface isn't as clear. You have to manually indicate whether the rental activity qualifies as a business under Section 199A, which requires you to understand the requirements yourself. The software doesn't guide you through that determination as thoroughly as TurboTax does.

That price is a bit steep for me since this is my first attempt at doing it myself. I was hoping to keep software costs under $500. Is Drake significantly better than TurboTax for someone who's not a professional preparer?

YES! I had a similar experience with withdrawals! They limited me to $3k per day without warning when I needed to pay for emergency home repairs. When I called customer service, they said I should have read the "digital disclosures" that apparently I agreed to. Never again.

This is really concerning to hear. I've only had the account for about 6 months and haven't tried to make any large transactions until this tax payment. Now I'm definitely reconsidering keeping my money there. Thanks for sharing your experiences.

Does Form 4868 help if you've already calculated your taxes and know the exact amount? I thought that was just for extending the filing deadline, not the payment deadline?

You're exactly right - Form 4868 only extends the filing deadline, not the payment deadline. You still need to pay your estimated tax by the original due date to avoid penalties and interest. However, filing the extension can still be useful in this situation because it gives you more time to sort out the payment issues and properly file your return without the additional pressure of the filing deadline. If there are any complications with the split payments or processing time, at least you won't have the added stress of rushing to complete your return at the same time.