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I'm surprised nobody mentioned this yet - but your ex can still claim your son by filing a paper return instead of electronically. Then you'll BOTH get letters from the IRS asking for documentation to prove who has the right to claim him. The IRS will apply their tiebreaker rules: 1. They look at which parent the child lived with more nights during the year 2. If equal, then they give it to the parent with higher AGI 3. If neither of you are the parent, it goes to the person with the highest AGI So if your ex has documentation showing they were supposed to claim your son this year, you'll end up having to pay it back anyway plus potential penalties. Better to fix it now.
Wait, so even with our divorce agreement stating we each claim one kid per year, the IRS might still give both kids to whoever they lived with more? Our custody is 50/50 on paper, but they probably stayed with me slightly more nights because my ex travels for work sometimes.
The divorce agreement is a legal document between you and your ex, but the IRS follows their own rules when there's a dispute. So yes, if you had the kids more nights, the IRS might side with you and allow your claims - but that doesn't mean you're not violating your legal agreement with your ex. If you win with the IRS but your claim violates your divorce agreement, your ex can take you to family court for enforcement. The court could order you to pay your ex the difference in tax benefit or could find you in contempt. Some judges take these violations very seriously. That's why it's generally better to follow your agreement even if IRS rules might let you claim both children.
Something to consider - have you talked to your ex about this situation? I know you mentioned you don't communicate well, but maybe explain your financial hardship and offer to make it up next year by letting them claim both kids? Or perhaps work out some other arrangement to compensate them? I had a somewhat similar situation with my ex, and we managed to work out a deal where I claimed both kids one year when I really needed it, and then he got to claim both the following year. We put it in writing just to be safe. Sometimes being upfront is better than dealing with the fallout later.
This is actually really good advice. Even if you and your ex don't get along, a direct conversation might avoid a much bigger problem. Courts don't look kindly on violations of divorce agreements, especially financial ones.
One thing nobody has mentioned yet - make sure you're aware of the safe harbor rules for estimated taxes. If your 2023 AGI was under $150,000, you only need to pay 100% of your 2023 tax liability through withholding or estimated payments to avoid penalties for 2024. If it was over $150,000, you need to pay 110%. So depending on your situation, you might not actually need to make those estimated payments for 2024 if your 2023 tax liability was low enough and you've had sufficient withholding.
Thanks for mentioning this! My AGI for 2023 will be around $175,000, so I'd need to hit the 110% threshold. My concern is that I've had very little withholding for 2024 since most of my income this year is from self-employment, and I didn't make any quarterly payments yet. That's why I was hoping to use the overpayment strategy to catch up a bit.
Based on your situation with $175,000 AGI and mostly self-employment income, you're right to be concerned about catching up on those estimated payments. The 110% safe harbor would definitely apply to you. Since you've missed the first couple of quarterly payments for 2024, you will likely face some underpayment penalties for those specific quarters. However, overpaying on your 2023 return will help minimize additional penalties going forward. Make sure to make your remaining quarterly payments for 2024 on time (September 15 and January 15) to avoid further penalties.
I just want to clarify something I learned the hard way: even if you overpay your 2023 taxes when filing in October, that overpayment credit is technically considered applied on April 15, 2025 for your 2024 taxes. BUT this doesn't erase any underpayment penalties you might owe for missing the actual quarterly due dates. The IRS calculates underpayment penalties quarter by quarter, so if you missed the April 15 and June 15 estimated payments for 2024, you'll still owe penalties for those quarters specifically. The overpayment just helps you going forward to meet your overall 2024 tax obligation.
Pro tip: if it was a smaller home daycare, sometimes they use their Social Security Number instead of an EIN. In that case, you would need to put their SSN on Form 2441 instead. Did they ever mention if they were a registered business or just an individual provider?
If nothing else works, just file for an extension to buy yourself more time to track down the EIN. That's what I did when my kids' afterschool program director took off to Belize with no warning! Finally found another parent who had last year's form with the EIN on it. The extension gave me an extra 6 months to sort everything out without penalties.
Extensions only give you more time to file though, not more time to pay if you owe. Just something to keep in mind. You should still estimate and pay what you think you'll owe by the regular deadline to avoid potential penalties and interest.
I've had good luck using tax software like TurboTax Self-Employed for filing 1099-NEC forms. Yes, it costs money upfront, but at least they're honest about the pricing. They have a 1099 wizard that walks you through the whole process. Just make sure you get the right version that includes business forms.
Doesn't TurboTax charge extra for each 1099 form though? I heard it's like $15 per form or something, which adds up quick if you have multiple contractors.
The base package includes 5 forms, and yes, they do charge for additional forms beyond that. It's about $12.99 per additional form last I checked. For a small number of contractors it's reasonable, but you're right that it can add up if you have many. The advantage is that everything integrates with your tax return if you're using TurboTax for that too.
Can someone tell me if there's a deadline for getting 1099-NEC forms to contractors vs submitting them to the IRS? I'm also dealing with this fillabletaxforms.com mess and now I'm worried about missing deadlines.
You need to provide 1099-NEC forms to your contractors by January 31, 2025. The same date applies for filing them with the IRS - both are due January 31st, regardless of whether you file electronically or by paper. Missing these deadlines can result in penalties ranging from $50 to $290 per form, depending on how late you file and whether it's considered intentional disregard.
Eve Freeman
Creator for 3 years here. One thing nobody mentioned yet - you need to put aside money for quarterly estimated tax payments! This was my biggest mistake year 1. If you're making decent money, the IRS expects you to pay taxes quarterly, not just at year-end. I got hit with penalties my first year because I didn't know this. Now I automatically put aside 30% of every payment I get into a separate savings account for taxes.
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Clarissa Flair
ā¢Do you literally need to make 4 equal payments? My income is super inconsistent - I might make $5k one month and $500 the next. How do you handle that with quarterly payments?
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Eve Freeman
ā¢You don't need to make exactly equal payments. The IRS allows you to use the "annualized income installment method" which means you can make payments based on what you actually earned during each period. This is perfect for creators with inconsistent income. You file Form 2210 with your tax return to show that your uneven payments match your uneven income. Honestly though, I just try to hit at least 90% of my estimated tax liability for the year through my quarterly payments to avoid any penalties. The dates to remember are April 15, June 15, September 15, and January 15 of the following year.
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Caden Turner
Don't forget about the self-employment tax! This was a huge shock to me my first year. You pay both the employer and employee portion of Social Security and Medicare taxes, which comes out to about 15.3% ON TOP OF your regular income tax.
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McKenzie Shade
ā¢There's a deduction for half of your self-employment tax though right? I remember reading something about that.
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