But isn't the home office deduction a huge audit red flag? I heard the IRS targets people who claim this deduction. Is it really worth the risk?

The home office deduction being an audit trigger is mostly an outdated myth. The IRS has simplified the deduction in recent years with the "simplified option" that allows you to deduct $5 per square foot (up to 300 square feet) without needing detailed records of home expenses. The key is making sure you have a space used "regularly and exclusively" for business. It doesn't have to be an entire room - it could be a dedicated desk or work area. Just take a photo of your workspace as documentation and be honest about the square footage. If you follow the rules, there's nothing to worry about. The tax savings are absolutely worth it, especially for freelancers who legitimately work from home.

I used it last year and it was pretty good for handling both my teaching job and my freelance design work. It walks you through all the self-employment deductions and even has a feature to help estimate quarterly payments for the next year. The expense tracking app that comes with it was decent for keeping receipts organized throughout the year.

Wait, so even with the extension I still need to pay by April 15th? I thought the whole point was to give me more time since I don't have the exact numbers yet?

Yes, you still need to pay your estimated tax by the original deadline (usually April 15, though it varies some years). The extension only gives you more time to submit the actual return paperwork, not more time to pay what you owe. If you don't pay what you owe by the original deadline, you'll be charged interest on the unpaid amount from the original due date until you pay. It's not a huge penalty (currently around 7% annual rate), but it does add up. Make your best estimate and pay that amount when you file Form 4868. If you overpay, you'll get a refund when you file your complete return later.

This worked for me too! Called right when they opened and only waited 20 mins instead of the usual 2+ hours. The agent was able to see my W2 info in their system and gave me the numbers I needed for my extension form.

I thought TurboTax and TaxAct only have free versions if your return is super simple? I have investment income and a home office deduction so I always assumed I'd have to pay for the premium versions. Did you have any complex situations on your return?

You're partly right - the completely free versions are limited, but they're more comprehensive than most people realize. I have some dividend income and capital gains, and TaxAct's free version handled those fine. For more complex situations like home office deductions, you might need to use their paid version, but it's still much cheaper than paying an accountant. I found that the Deluxe version was only around $25 when I started with the free version then upgraded only for the features I needed. Completely worth it to avoid the stress of technical glitches like that checkbox issue!

Thanks for this info! One question - do you happen to know if the calculator in the forms is at least smart enough to add this automatically based on birthdate? Or do we need to manually do the math for line 12a?

The calculator doesn't automatically adjust for age or blindness since it relies on those checkboxes working properly. You'll need to manually calculate your standard deduction amount by adding your base standard deduction plus the additional amounts I mentioned. For 2024 taxes, the base standard deduction amounts are $14,600 for single/HOH, $29,200 for married filing jointly. So for example, if you're single and over 65, you'd manually enter $14,600 + $1,850 = $16,450 on line 12a. The system won't do this calculation for you because of the checkbox malfunction.

Thanks for the response! I probably have about 15-20 transactions total. Not a ton, but enough to be annoying to calculate manually. There were definitely price movements between when I bought the BTC and when I traded it... some trades I made when BTC was way up and others when it had dropped.

With 15-20 transactions and significant price movements, it's probably worth using either TaxAct's crypto feature or one of the specialized services others have mentioned. Trying to manually calculate 20 transactions with varying cost basis is error-prone and time-consuming. Make sure you also track the cost basis of those other coins you received in the trades, because when/if you eventually sell or trade those, you'll need to know what they were "worth" when you acquired them to calculate future gains/losses. This is where specialized crypto tax software really helps, as it maintains that chain of cost basis calculations.

Yes, you should still report it. The silver lining is that those losses can offset other capital gains or up to $3,000 of ordinary income. So reporting your crypto losses could actually reduce your overall tax bill!

That makes so much more sense! I think that's exactly what my friend was talking about - getting help from a retirement planner, not some tax form I was missing. This has been stressing me out for days! So just to confirm, for a normal contractor with 1099 income, I just need to file Schedule C with my regular tax return, right?

Exactly! As a contractor receiving 1099s, Schedule C is your main form for reporting business income and expenses. You'll also need Schedule SE for self-employment tax. Those are the standard forms for independent contractors. If you have a retirement account like a SEP IRA or Solo 401(k), you might have additional forms, but there's no specific "CRP" form involved in standard contractor tax filing.

I used FreeTaxUSA last year for my Schedule C filing and it worked great. It's not part of the IRS Free File program, but it's only $15 for state filing and federal is free. Way cheaper than TurboTax and handled all my contractor income perfectly.