Thanks for the suggestion! I double-checked and both programs have the same 1099-NEC income included, but I noticed TurboTax has my photography business categorized as "Arts & Entertainment" while TaxAct has it as "Professional Services." Could that make such a big difference?

Yep, that could absolutely cause the difference! The business classification can significantly impact how the software calculates your QBID. "Professional Services" might be triggering TaxAct to apply different limitations or calculations than the "Arts & Entertainment" category in TurboTax. Try changing the classification to match in both software and see if that resolves the discrepancy. Based on IRS guidelines, photography would typically fall under "Arts & Entertainment" rather than "Professional Services" unless you're doing commercial/corporate work specifically.

I've used both for the last three years. TaxAct is significantly cheaper but I've found TurboTax catches more deductions, especially for business owners. That said, TaxAct has gotten much better with their interface recently. If your taxes are relatively straightforward, TaxAct is probably fine and will save you money.

Thanks for the insight! My taxes aren't super complicated, just a W-2 and some investment income. Might give TaxAct a try this year then.

What about if you're a high-income earner? I heard there's a different percentage for people making over a certain amount. Is it still "whichever is smaller" in that case?

You're right to ask about high-income situations! If your AGI was over $150,000 (or $75,000 if married filing separately) in the prior year, the rule changes slightly. Instead of 100% of your prior year tax, you need to pay 110% of your prior year tax. So using the same example but assuming you're a high earner: - 90% of $12,000 = $10,800 - 110% of $8,000 = $8,800 In this case, $8,800 would be smaller, so that's your target to avoid penalties. And yes, it's still "whichever is smaller" - the IRS just adjusts the prior year percentage for high-income taxpayers.

Yep, the same rules apply for self-employment income. Your required estimated tax payments (to avoid penalties) still need to cover the SMALLER of 90% current year or 100% prior year (110% if high income). The difference is you need to include both income tax AND self-employment tax in your calculations. A good practice for self-employed folks is to set aside 25-30% of your income for taxes (including SE tax), but using last year's total tax as your safe harbor amount is usually the easiest way to avoid penalties if your income is growing.

How do you check with state agencies if you don't know which states they might have filed in? Do you have to contact all 50 states?

You don't need to contact all 50 states. When you get your federal tax transcript, it may show which states had information returns (like W-2s or 1099s) filed. Focus on those states first. Additionally, if the identity thief used your address, they likely filed in your home state. If they used a different address, the IRS transcript might show where refunds were sent, giving you a clue about which states to check. Most state tax departments have identity theft departments similar to the IRS.

Did freezing your credit affect your ability to get housing? I'm worried since I'm still establishing myself after being homeless and might need to apply for apartments.

That's super helpful! Do you use any particular software or system to manage all this documentation? I'm trying to figure out the best way to stay organized from the beginning.

I use a combination of tools. The tax software I use (Drake) has built-in due diligence worksheets that help tremendously. For document management, I started with a simple folder system but upgraded to SmartVault after my client load increased. I also created my own checklists in Excel for different types of returns (W-2 only, self-employed, rental property, etc.) that I complete for each client. The most important thing is consistency - whatever system you choose, use it for every single client, no exceptions. It becomes second nature after a while, and that's when you can feel confident you're protected against penalties.

That makes sense, but I've heard horror stories about preparer penalties being applied even when the preparer thought they were following the rules. Is there any protection or insurance available specifically for preparers?

I thought code V was only for incentive stock options (ISOs), not for non-qualified stock options? OP mentioned having NQSOs so I don't think they would have a code V entry. Isn't NQSO income just included in boxes 1, 3, and 5 as regular income?

You're absolutely right - I mixed up the reporting requirements. Code V is indeed only for ISOs, not for NQSOs. For non-qualified options, the income is simply included in boxes 1, 3, and 5 of the W-2 as ordinary income, with no special code needed. As for ESPPs, they're still worth considering alongside NQSOs, but you're correct that they're a completely different benefit with their own tax treatment. The main advantage is the potential discount on the purchase price (usually up to 15%) and the possibility of favorable tax treatment if specific holding periods are met.

Oh that's a great point! Does anyone know if you can get double-taxed by different states on the same stock option income? I moved from Massachusetts to Texas mid-year and exercised options that had been vesting for years.