Is there any way to reduce the self-employment tax? That's a huge chunk of my income, and I didn't realize it would be that much higher than regular income tax.

You can reduce your self-employment tax by setting up an S-Corporation instead of operating as a sole proprietor. With an S-Corp, you pay yourself a reasonable salary (which is subject to self-employment tax) and take the rest as distributions (which aren't subject to SE tax). For example, if your actual earnings are $125K, you might pay yourself a salary of $75K (subject to the 15.3% SE tax) and take $50K as distributions (not subject to SE tax). This could save you thousands. However, S-Corps have more paperwork and costs, so you need to make sure the tax savings outweigh those expenses.

I thought you can't claim home office deduction unless you have a separate entrance for clients? Is that still true?

Thanks for bringing up Form 3115. Does everyone switching to accrual need to file this, or are there exceptions for smaller businesses? Also, is the 481(a) adjustment always taxable immediately or can it be spread out?

Yes, virtually all businesses switching accounting methods need to file Form 3115, regardless of size. The only real exception might be if you're just starting your business and haven't filed a tax return yet - then you can select your accounting method on your first return. For the Section 481(a) adjustment, good news - it's typically spread over 4 tax years if it's a net positive adjustment (increasing taxable income). This prevents a huge tax hit in a single year. If it's a negative adjustment (decreasing taxable income), you generally get to take the full amount in the year of change, which is advantageous.

I use QBO with accrual and what worked for me was creating a liability account called "Customer Deposits" or "Deferred Revenue." Then when you receive payment before shipping, record it to that account instead of income. I use a Sales Receipt that points to the liability account rather than income.

That's a really good point! How do you figure out the right amount for state though? Is there a calculator similar to the IRS withholding calculator?

Most states do have their own withholding calculators on their department of revenue or taxation websites. Just search for "[your state] withholding calculator" and you should find it. Some states like California and New York have particularly good calculators that will help you determine the right withholding amount based on your specific situation. If your state doesn't have a good calculator, a general rule of thumb is to withhold about 5-7% of your income for state taxes in high-tax states, or 3-5% in moderate-tax states, though this varies widely depending on your income level and state tax structure.

I've used https://smartasset.com/taxes/income-taxes to get a rough estimate. It's free and lets you play with different scenarios. Not super detailed but gives you a general idea of how changes affect your tax bill.

8 If my W-2c shows they took out more taxes than on my original W-2, would I get more refund if I amend? Or is it not worth the hassle?

3 Yes, if your W-2c shows more federal withholding than your original W-2, filing an amended return would likely result in an additional refund. The difference would be whatever additional amount was withheld. Whether it's "worth the hassle" depends on the amount. If it's just $20-30, some people might not bother. But if it's hundreds of dollars, most would find it worthwhile to file the 1040-X. Remember that you generally have three years to claim any additional refund, so you don't have to rush if you're not ready to deal with it immediately.

19 Which tax software did you use that told you whether the changes mattered? Mine just makes me start over with a new return and I have to figure out if anything's different myself.

This is really helpful info, thanks! Are there similar income limits for deductions too? I got a decent raise this year and I'm wondering if that might affect what I can claim when I file in 2025.

Yes, many deductions have income limits too! Student loan interest deduction starts phasing out at $75,000 for single filers, traditional IRA deduction has limits if you have a workplace retirement plan, and medical expense deductions only count for expenses over 7.5% of your AGI, so higher income means fewer medical expenses qualify. If you got a big raise, definitely look into maxing out your 401(k) or other retirement accounts since that lowers your AGI and might help you qualify for more deductions and credits that have income limits.

In my experience, they do ask questions to try to determine eligibility, but they're only as good as the information you provide. If you don't know to mention something or misunderstand a question, you could miss out. I accidentally skipped some education questions last year and nearly missed a $1500 credit!