Oh no, I had no idea about quarterly payments! So I should have been paying throughout 2024 already? How do I even calculate how much to pay each quarter when my income varies so much month to month?

Yes, you should have been making quarterly payments for 2024, but don't panic too much - first-time business owners often miss this. The payments are due in April, June, September, and January of the following year. For calculating the amount, you have a few options. The safest way is to pay 100% of your previous year's tax liability divided by four (or 110% if your income was over $150,000). Since this is your first year, you can estimate based on your projected annual profit. The IRS Form 1040-ES has worksheets to help you calculate this. If your income varies a lot, you can also use the "annualized income installment method" which lets you pay based on what you actually earned each quarter.

The QBI is huge! But doesn't it phase out at certain income levels? I think there are also limitations based on business type.

You're right about the phase-outs, but they start pretty high - around $170,700 for single filers or $341,400 for married filing jointly (for 2024). Since OP mentioned making about $24,000, they should be well under the threshold. There are limitations for certain service businesses like law, medicine, consulting, etc., but a woodworking business making physical products would generally qualify without those restrictions. The basic calculation is straightforward for most small businesses under the income thresholds - typically 20% of your net Schedule C income.

Thanks for this advice! I just pulled out my Form 4549 and compared it to the CP22. You're right that there are penalties listed on the CP22 that weren't on the examination report, but they only account for about $1,200 of the difference. There's still $1,550 unaccounted for, which seems to be an additional tax assessment that wasn't in our agreement.

That's concerning. When you and the auditor reached an agreement, you should have signed a form acknowledging the additional tax assessment. Check if you have a copy of this agreement - it's your strongest evidence. With that $1,550 unexplained difference, you should definitely contact the IRS promptly. When you call, ask specifically for the "examination department" and reference your audit case number. They should be able to pull the records and see what was actually agreed upon. Be prepared to fax or mail copies of your documentation showing the original agreed amount.

This is excellent advice. The IRS often combines multiple issues in a single notice, especially if they're doing a multi-year review. I've seen CP22s that reference adjustments from completely different issues all bundled together.

7 So what form do I need to fill out for this? Is it complicated?

22 You'll need to fill out Schedule D (Capital Gains and Losses) and Form 8949 (Sales and Other Dispositions of Capital Assets). The 1099-B from Cash App contains all the information you need to complete these forms. It's not particularly complicated for simple transactions like yours. Most tax software, even free versions, will walk you through entering the information from your 1099-B and will automatically fill out these forms for you. The software will ask for details like purchase date, sale date, cost basis, and proceeds - all of which should be on your 1099-B.

24 This is the right answer. I had a similar situation last year. Reported tiny gains, took maybe 5 extra minutes in TurboTax free edition, paid no extra fees, and had zero issues. All this worrying is more work than just filing it correctly.

4 Exactly! People get so worried about tax stuff when the solution is often simple. In this case: report it properly, pay the fraction of a penny you might owe, and sleep well knowing you're compliant. If the IRS sent you a form, they know about it - just include it in your return.

16 Do you have a link to this? I tried searching but came up with several different resources and I'm not sure which one you're referring to.

7 Sorry I should have included the link! It's called "Tax Procedure" by Morgan and is available through the University of Minnesota Scholarship Repository. Just Google "Morgan Tax Procedure Minnesota" and it should be the first result. The direct PDF is a bit hard to link, but that search should get you there. The most recent edition covers all the TCJA changes and has excellent citations if you want to dive deeper into specific sections of the tax code.

12 Bloomberg's materials are extremely comprehensive but probably not where you want to start if you're new to tax law. They're really designed for practicing tax attorneys and CPAs who already have a strong foundation. I'd recommend starting with something more accessible to build fundamentals, then using Bloomberg as a reference resource when you need deep dives into specific topics.

I never thought to check that! We do use Workday actually. Is this something in the benefits section or somewhere else? I'll have to poke around tomorrow. If I could set preferences that would be awesome.

Check under the Payroll section in Workday. Look for something called "Tax Withholding" or "W-4 Elections." Most versions have a withholding calculator where you can play with different scenarios. Some even have a slider where you can choose between maximizing paychecks (0 refund) or getting a specific refund amount. It's usually in the same place where you would update your W-4 information. The calculator is pretty helpful because it shows how each change affects both your paycheck and your expected refund. If you don't see it, your HR department can tell you if this feature is enabled for your company.

This is actually a myth that needs to die. For most normal people, the "interest" you'd earn on the extra $20-40 per paycheck is minimal compared to the psychological benefit of getting a larger refund. Most people don't invest that small difference anyway.

You're missing the bigger financial picture. Even small amounts add up significantly over time, especially with compound interest. An extra $40 per paycheck is $1,040 annually that could be in your investment accounts growing instead of sitting with the IRS. But more importantly, having access to your full earnings gives you financial flexibility throughout the year. That money could go toward paying down high-interest debt, building an emergency fund, or investing in retirement accounts with tax advantages. It's about having control of your own money rather than voluntarily restricting access to it. For people struggling with cash flow issues, every dollar in their regular paycheck matters.