That's really helpful! But what if I didn't pay any taxes last year because I was a student and didn't have income? Does that mean I don't have to pay anything for this year's quarterly taxes, or am I misunderstanding the safe harbor rule?

If you didn't have any tax liability last year, then technically 100% of last year's tax would be $0. However, in this situation, you'd need to use the other safe harbor provision of paying 90% of what you'll owe this year. Since this is your first year with self-employment income, you do need to make estimated quarterly payments. But the good news is that with your relatively low income level around $6,800, your total tax obligation won't be very high. You might actually qualify for certain deductions and credits that could significantly reduce what you owe.

Your clients should send you a 1099-NEC form (for Non-Employee Compensation) if they paid you $600 or more during the year. You don't create these yourself. However, whether you receive 1099s or not, you're still required to report all your income and pay quarterly taxes on it. The 1099s are basically just documentation of what you earned, but you should be keeping track of all your income regardless of whether you get these forms. For calculating quarterly taxes, you'll estimate your annual income and tax liability based on your earnings, then divide by 4 to determine your quarterly payments.

Omg I didn't even think about that possibility! Just double-checked my return and thankfully the bank info looks right. Good looking out - that would've been such a headache to deal with!

That's great you caught it in time! Another tip since it's your first time filing - save a PDF copy of your completed tax return somewhere safe. You'll often need info from previous year returns when filing next year, and it's super annoying to not have it handy.

I've had multi-state returns for years and state refunds are wildly inconsistent. Some states are quick (like 5-7 days) while others can take 2+ months. Idaho is notoriously slow in my experience. They were still using paper processing for a lot of their internal systems last I checked.

That's an interesting idea I hadn't thought of. Since her business is a sole proprietorship, would that even work? Wouldn't it still trigger a taxable event since it's essentially transferring to her personally?

You're right that with a sole proprietorship it gets tricky since there's no legal separation between the business and the owner. If you formed an LLC or S-Corp first, you might have more options, but that introduces other complexities. One option might be to explore using the stock as collateral for a business loan to purchase the property instead of selling it outright. This way you keep the stock, avoid the capital gains for now, and can deduct the interest payments. The downside is you'd have ongoing debt, but if the stock continues to appreciate, it might be worth it long-term.

Commercial real estate is still depreciated over 39 years under straight-line depreciation. The recent changes mainly affected Section 179 expensing and bonus depreciation for personal property and qualified improvement property, not the building itself. For a sole proprietorship purchasing a commercial building, you'd still report the depreciation on Form 4562 and Schedule C. The property's purchase price (minus the value of the land, which can't be depreciated) determines your annual depreciation deduction.

Thank you for this! Does FreeTaxUSA handle 1099 income too? I have a small side gig that I get a 1099 for and that's usually when TurboTax hits me with the "upgrade to premium" nonsense.

Yes, FreeTaxUSA handles 1099 income with no extra charge for the federal return. I have a side gig too and I enter multiple 1099s every year without any "premium upgrade" nonsense. That's one of the main reasons I switched from TurboTax years ago. They have a pretty straightforward interface for entering self-employment income and expenses. You'll still fill out a Schedule C just like with any other service, but they don't charge extra for it. The state return does cost about $15, but that's still way cheaper than most alternatives.

This is terrible advice. You should always file your taxes if you meet the filing requirements. Sometimes there are credits or deductions you don't know about, and establishing a history of filing on time can help if you ever do get audited in the future.

Thank you for this explanation! I just checked and my allowance is definitely being added as taxable income on my paystub. So it sounds like I could decline that taxable allowance and instead put the equivalent amount into the TRA pre-tax? Would I need to specifically tell HR I'm declining the allowance, or just sign up for the TRA?

You're exactly right - if it's currently being added as taxable income, you can decline that and instead direct those funds to the TRA pre-tax, which would save you money. You would need to specifically notify HR that you want to decline the taxable parking allowance and instead enroll in the TRA benefit. Make sure to confirm with your benefits administrator that this is allowed under your specific plan rules, as some employers have unique policies. Also verify the exact process for declining the allowance - some companies require a specific form or election during open enrollment, while others might need a simple email to HR.

Could you explain this a bit more? I'm not sure I understand how the Social Security wage base would affect the TRA benefits.