Is this actually true? That would be a huge help for me. I just realized I'm under-withheld for 2023 and was thinking about submitting a new W-4 to increase withholding for the last two months.

Yes, absolutely true! It's one of the less known advantages for W2 employees. The IRS regulations consider withholding to have been paid proportionally throughout the year regardless of when it was actually withheld. So you can absolutely submit a new W-4 now to increase your withholding for the remaining months of 2023, and the IRS will treat it as if you had been paying at that higher rate all year long. This can help you avoid underpayment penalties even if you were under-withheld for most of the year.

Form 1040-ES is for making estimated tax payments, not just for self-employed people. You need it if you expect to owe $1,000 or more when you file your tax return AND your withholding/credits won't cover at least 90% of current year tax (or 100%/110% of prior year). Most W2 employees don't need it because their employer withholds enough from their paychecks. But if you have significant income not subject to withholding (investments, rental income, side gigs), you might need to make estimated payments using 1040-ES.

Good point! I'm in New York and got surprised last year when my state return didn't match the federal deductions. Do you know if there's a good resource that compares state vs federal depreciation rules?

I don't know of one comprehensive resource that covers all states, unfortunately. Each state has its own tax department website that usually outlines the differences between federal and state treatment of depreciation and Section 179. For New York specifically, they've partially decoupled from federal bonus depreciation rules but do follow the federal Section 179 limits with some modifications. Your best bet is to check the NY Department of Taxation and Finance website or consult with a tax professional who specializes in your state. I've found that state-specific tax forums can also be helpful for these kinds of questions.

What's the easiest way to track mileage? Do you use an app or just write it down?

I use MileIQ app and it's been a lifesaver. It automatically tracks all my drives and I just swipe right for business trips and left for personal. At the end of the year, I can export a detailed report for tax purposes. Before that, I tried keeping a paper log but always forgot to update it. The IRS can be really strict about mileage documentation during audits, so having an app that automatically creates timestamped records with starting and ending locations has given me peace of mind. Some other popular options are Everlance and Hurdlr - they all have free versions you can try.

I didn't think about retirement contributions! You might be onto something. I did have to reduce my 401k percentage for a few months last year to cover some unexpected expenses. That probably pushed more of my income into taxable territory. Would that really make that big of a difference though?

It absolutely can make that big of a difference! If you reduced your contributions even temporarily, that's additional taxable income. For example, if you normally contribute 10% to your 401k but reduced it to 5% for even a few months on a $50,000 salary, that's potentially an extra $2,000+ of taxable income on top of your raise. That additional taxable income can definitely bump up your blended rate, especially if it pushes more of your money into a higher bracket. Check your W-2 box 1 from both years - the difference might be larger than just your $3,500 raise if your retirement contributions changed.

This is a good point. I had the child tax credit in 2023 but my kid turned 17 so we didn't get it for 2024. Our income only went up about $2000 but our tax bill went up nearly $2500 because of losing that credit. The tax software just showed our "rate" was higher without explaining why.

That's super helpful, thanks! I filed my original return about 3 weeks ago. Do you know roughly how long I should wait before filing the amendment? And do you think I should use a tax professional for the amendment or can I do it myself with tax software?

The IRS typically processes electronically filed returns within 21 days, so you're probably right at that threshold. I'd suggest checking your refund status on the "Where's My Refund" tool on IRS.gov. Once it shows your return has been processed, you're good to file the amendment. For amounts this small with just two additional 1099 forms, tax software should be perfectly adequate for the amendment. Most major tax software programs have an amendment feature. Just enter the additional information from your Robinhood 1099-B and Cash App 1099, and the software will generate the 1040-X form for you. The whole process should take less than 30 minutes.

Robinhood does report cost basis to the IRS for most securities purchased after 2011. You can verify this on your 1099-B - if Box 1e (Cost or other basis) is filled in, then yes, the IRS is receiving that information. They know exactly what your gain/loss should be.

Thanks for this additional info! I definitely will file long before that 3-year deadline hits, but good to know there's an absolute cutoff. Does the same apply for state taxes or does that vary by state?

The 3-year refund claim deadline is for federal taxes. State tax deadlines vary by state - some follow the federal 3-year rule, while others have shorter or occasionally longer timeframes. For example, California and New York generally follow the federal 3-year rule, but some states like Montana only give you 2 years to claim a refund. I'd recommend checking your specific state's tax agency website for their rules since it's not standardized across all states.

True, but with the current disaster at the IRS with processing times, you might not get that refund anytime soon anyway. My brother filed in April and just got his refund last week!