Thanks for pointing this out. I actually think we might have messed up how we entered our income on the calculator. We put in our annual salaries but I'm wondering if we should have included the value of our benefits too? We both have health insurance, dental, and contribute to our 401ks - none of which we included in the calculator. Would that make a difference in the withholding calculation?

No, you did that part correctly. The withholding calculator wants your gross income before any deductions for benefits or 401k contributions. What might have happened is that you may have entered something incorrectly in the "adjustments" section. The new W4 form is confusing because it asks for "deductions other than the standard deduction" rather than total deductions. I'd suggest trying again with the calculator but check each entry carefully. Make sure you're entering your anticipated tax credits correctly too. And be sure to indicate that you're married filing jointly on both of your W4 forms. Another possibility is that your previous withholding as single filers was too low, and the calculator is now correcting for that on top of your married status, which would explain the large adjustment.

In most cases, filing jointly is better. Filing separately means you lose a lot of tax benefits like student loan interest deduction, child tax credits, earned income credit, etc. It's usually only beneficial in very specific situations like if one spouse has huge medical expenses or income-based student loan payments. I'd recommend running your taxes both ways before deciding, but for most couples, jointly is the way to go.

Thanks for the info! I didn't realize filing separately meant losing so many deductions and credits. We have student loan interest deductions so it sounds like joint is probably still best for us. I guess I'll just have to accept the higher withholding for now and see what happens when we actually file next year. Maybe we'll end up with a nice refund to make up for the monthly budget squeeze.

That's a great idea I hadn't thought of! Have you actually gotten detailed help from them before on how to report specific transactions? I'll definitely give them a call tomorrow if that's the case.

I've gotten basic guidance from them before, but it can be hit or miss depending on who you talk to. Their customer service can usually help clarify what specific codes or entries on your form mean. What they typically won't do is give specific tax advice about how to report things on your return - they'll explain their form but stop short of telling you exactly what to enter on your tax forms. Still worth calling though, as they can often clear up confusion about what certain transactions or adjustments on their statements represent.

I've had mixed results with Reddit. Sometimes you get amazing detailed answers from actual tax pros, and other times you get conflicting advice that leaves you more confused. The challenge is knowing which advice to trust when you get multiple different answers.

15 How do you calculate how much to pay for estimated taxes? Is there some formula or percentage I should be setting aside from each payment I receive?

10 The safe harbor method is to pay either 90% of your current year's tax liability or 100% of last year's tax liability (110% if your income is above $150,000), whichever is lower. For a quick practical approach, I set aside about 30% of all my 1099 income - roughly 15% for self-employment tax and 15% for income tax. This has worked well for me, but your tax bracket might differ. The IRS has Form 1040-ES with a worksheet to calculate more precisely, or you can use tax software that offers quarterly tax calculators.

4 Does that apply even if you're just a freelancer/contractor working for one company? I thought B&O tax was just for actual businesses with multiple clients.

Thanks for sharing your experience! That makes me feel better about the situation. Do you remember how long it took for them to send you the letter after you filed your original return?

I think it took about 14 months after I filed my original return. The IRS has been super backlogged the last few years, so it takes them longer to match up 1099s with tax returns. If you're worried, filing an amended return is definitely the safest option. But in my case, the adjustment they made was accurate and the process was pretty painless overall.

That's risky advice. Even if there's a chance the employer didn't file the 1099, it's not worth gambling on. Better to be honest and file the amendment.

Good point about the improvements! For the first house, I actually did replace the roof ($14k) and installed a new HVAC system ($9k). Would I need receipts for all of these improvements or are there other ways to document these if I can't find all the paperwork?

Receipts are definitely the best documentation, but if you don't have them all, there are other options. Bank or credit card statements showing payments to contractors can work. Even emails confirming quotes that you accepted can help establish the costs. For major improvements like a roof or HVAC system, you might also have permit records with your local building department that can verify the work was done. Some contractors might also have records they can provide if you reach out to them. The IRS knows people don't always keep perfect records, but they do expect you to make a reasonable effort to document these costs.

Not necessarily. The test is whether you lived in it as your primary residence for 2 of the 5 years before selling. Who lives in it during other periods doesn't affect that qualification. If OP had rented it out, there might be some depreciation recapture to deal with, but since no rent was collected, that's not an issue.