What exactly is the pro-rata rule? I've been doing backdoor Roth for 2 years but have an old traditional IRA with about $30k in it. Should I be worried?

Yes, you should definitely be concerned. The pro-rata rule means you can't just convert your non-deductible contributions tax-free if you have other pre-tax IRA money. The IRS looks at all your IRA accounts (traditional, SEP, SIMPLE) as one big pot when you do a conversion. The taxable portion is calculated based on the ratio of pre-tax money to the total IRA balance. So if 80% of your total IRA money is pre-tax, then 80% of any conversion will be taxable regardless of which specific dollars you're converting.

TurboTax actually handles this pretty well but it's not obvious. You need to go to the IRA contributions section and make sure you select "nondeductible contributions." It'll then walk you through Form 8606. Just make sure you indicate which tax year the contribution was for. For the conversion, that goes in a separate section under "IRA distributions.

How's the reporting feature? I need to be able to generate reports for specific time periods or clients.

The reporting is actually one of its strongest features. You can generate reports by client, project, time period, expense category - pretty much any way you want to slice the data. I run quarterly P&L reports for my own tax planning, but also generate client-specific expense reports when I need to justify certain pass-through costs. They've also added a dashboard feature that gives you a real-time view of outstanding invoices, expenses by category, and profitability by client. I check it weekly to make sure I'm staying on track with my financial goals.

I used Everlance for about 6 months. It's decent for mileage tracking but pretty basic for everything else. The automatic trip detection was hit or miss for me - sometimes it would record random trips when I was just sitting at my desk! The receipt scanning is okay but not great for complex receipts. If your needs are simple and mainly mileage-focused it might work, but I switched to something more comprehensive.

Thanks for the insight! Sounds like it might not be robust enough for what I need. I've got a lot of different expense types beyond just mileage.

Good point about state taxes! I'm in Illinois and haven't even thought about that side of things. Would I use the same 1040-ES form to calculate what I might owe the state, or is there a separate process for that?

For state taxes, you'll need to use your state's specific forms, not the federal 1040-ES. Each state has its own estimated tax forms and procedures. For Illinois, you'll want to look up form IL-1040-ES, which is their estimated tax payment form. States also have different thresholds and requirements for when you need to make estimated payments. Some states follow the federal safe harbor rules, while others have their own unique requirements. I'd recommend checking the Illinois Department of Revenue website or giving them a call to confirm their specific rules about estimated taxes for self-employment income.

Is the self-employment tax deduction an itemized deduction or can you take it even if you use the standard deduction?

I hadn't thought of that option. Do you know if there's a way to check online to confirm the overpayment is showing as a credit on my account? I'm a bit worried about skipping a future payment without knowing for sure the IRS has properly recorded the extra payment.

Yes, you can check your account on the IRS website. Just go to irs.gov and use the "View Your Account" tool - you'll need to create an account if you don't already have one. It will show your current balance and any credits on your account. I'd recommend waiting about 2-3 weeks after both payments have processed before checking, as it takes some time for everything to show up correctly in their system. If you're planning to use the credit for a quarterly estimated payment, just make sure to check well before that payment is due to confirm everything looks right.

Did you get any interest on the refund for the time they held your money? Seems like they should pay interest if they're holding onto a clear overpayment for 3 months!

Thanks for mentioning the first-time penalty abatement - I had no idea that was even a thing! Is that something I'd need to specifically request or would they automatically check if I'm eligible?

You definitely need to specifically request first-time penalty abatement - they won't offer it automatically. When you call to set up your payment plan or after you receive your first notice with penalties, you can request it then. The magic words are "I'd like to request first-time penalty abatement under the IRS First-Time Abatement administrative waiver." You'll need to have a clean compliance history for the past 3 years (filed all required returns and had no significant penalties) to qualify. It can save you a good chunk of money since it typically waives the failure-to-pay penalty, which adds up over time. It doesn't waive interest though, just the penalties.

The IRS doesn't typically send confirmation emails when they process returns. If you filed through tax software, the software company usually sends a confirmation when the IRS accepts the return, but that's different from it being fully processed. You'll need to check "Where's My Refund" on the IRS website or your account in the online portal to see the status once their systems update.

Thanks for the info! I did get the acceptance email from my tax software but wasn't sure if that meant it was fully processed or just received. I'll keep checking the online portal.