Thanks this makes so much more sense with actual numbers! So is there any easy way to calculate what specific dollars are being taxed at what rate? Like if I get a $5000 bonus, is there a quick way to know how much of that I'll actually take home?

For a $5,000 bonus, it would be taxed at your marginal rate (your highest bracket) because it's additional income on top of what you already make. So if your highest bracket is 24%, about $1,200 would go to federal income tax. However, bonuses are often initially withheld at a flat 22% for federal tax (this is just withholding, not the actual final tax rate). Your actual tax obligation will be calculated when you file based on your total income and where it falls across the brackets. If your true marginal rate is higher than 22%, you might owe a bit more at tax time.

Could you share that spreadsheet please? I'm terrible at math and this whole conversation has me confused. I make $110k and my wife makes $72k and I have no idea what our blended rate should be.

I'll simplify it for you - with a combined income around $182k (minus standard deduction), you're likely in the 24% bracket, but your blended rate would be approximately 18-19%. The crucial thing to remember is that only the portion of your income that exceeds each threshold gets taxed at the higher rate. For 2025 married filing jointly, the first $22,000 (standard deduction) isn't taxed at all, then 10% applies to the first $23,200 of taxable income, 12% to the portion between $23,200 and $94,300, 22% from there to $190,750, and 24% on anything above that but below $364,200.

Is this really true? I thought there was always a penalty for filing late regardless of whether you owe money or are getting a refund.

Yes, it's absolutely true! The IRS only charges penalties and interest when you owe them money and pay late. They have no incentive to penalize people who are owed refunds - they're actually saving money by holding onto your refund longer! The only "penalty" for filing late when you're due a refund is that you lose the refund entirely if you wait longer than 3 years from the original due date. So for 2020 taxes, you'd lose your refund if you don't file by May 17, 2024. But there are no failure-to-file penalties or interest charges when you're getting money back.

This! I thought I just had a "simple return" for 2020 but turned out I qualified for education credits from some classes I took that year. Added almost $1000 to my refund that I wouldn't have gotten if I just rushed through it.

That's a really good point! My sister definitely treats it like a business - she has separate bank accounts, business cards, advertising, and she's been working on adjusting her pricing to be more profitable. She's only been doing it for about 18 months, so this is her first year with a full 12 months of operation. Does that help her case for it being a legitimate business vs a hobby?

Yes, that definitely helps her case! Separate business accounts, marketing materials, and actively working on pricing strategies all demonstrate business-like behavior. The fact that it's only been running for 18 months is also helpful - the IRS generally expects businesses might have losses in their early years. For additional protection, I'd suggest she document her efforts to make the business profitable - like market research, business plan updates, or courses she's taken to improve her skills or efficiency. The IRS uses a nine-factor test for determining hobby vs. business, and documentation showing profit motive is crucial. With her full-time job providing income, she's not dependent on the grooming business for livelihood, which could be one mark against her, but the other factors you mentioned strongly support treating it as a legitimate business.

I used it last year for my photography side gig that showed a small loss. It was pretty straightforward for getting the Schedule C done correctly, and it asked all the right questions to make sure I got all possible deductions. I think it was worth it for the peace of mind.

How would you know if someone claimed you as a dependent? Is there a way to check that before filing?

I did this last year and it worked great! Bring a government ID, your social security card, and copies of your last two years of tax returns if you have them. They were able to verify my identity on the spot and give me my IP PIN immediately. Took about 45 minutes total with waiting time. MUCH better than the phone nightmare.

This is terrible advice. What you're describing will absolutely trigger issues if you're ever audited. By not amending the original return where you claimed the HSA deduction, you effectively took a tax deduction you weren't entitled to. Just because you haven't been caught doesn't mean it's the right approach. Plus, the 6% excise tax DOES apply regardless of whether you report it or not. The IRS may eventually catch up to this and issue a notice with penalties and interest. Proper correction requires both removing the excess contribution AND amending the return where the deduction was taken.

Look, I'm just sharing what worked for me. I checked with the HSA administrator before doing this and they said it was a valid approach. When you withdraw the funds, you're paying taxes on them as income. I didn't claim an HSA deduction on my original return because my contributions were pre-tax through my employer. The money showed up on my W-2 as having been contributed to the HSA, and then when I withdrew it, it showed up on the 1099-SA. The 6% excise tax is for excess contributions that remain in the account. Since I took the money out, it didn't apply once it was removed. Obviously everyone should do what they're comfortable with, but not everyone has the time or money to file amended returns and deal with multiple years of tax forms for what might be a relatively small amount of money.

Thanks for pointing this out. I actually confirmed with my parents that their plan is NOT an HDHP - it's a PPO with a $500 deductible. So unfortunately I am definitely ineligible for the HSA contributions I made. I appreciate all the help from everyone! I think I'm going to request the excess contribution withdrawals from both HSA administrators, file an amended return for 2022, and report the distributions on my 2023 return. Seems like the most straightforward approach that avoids future headaches. Good news is I finally got a decent night's sleep after reading all these responses - at least I know there's a clear path forward now!