That's really helpful! We might be in that higher AGI category because of the stock sale. So does that mean we'd need to withhold 110% of last year's tax (including the unexpected $9,300) to be safe? And that withholding tip is brilliant - I had no idea the IRS treats withholding as if it happened evenly!

Yes, if your AGI was over $150,000 last year, you'd need to cover 110% of your total tax liability (including that $9,300) to guarantee no underpayment penalty. But that's only if you're using the "prior year tax" safe harbor method. The withholding strategy is a great safety net. Unlike estimated payments which must be made quarterly in the correct amounts, the IRS treats withholding as if it occurred evenly throughout the year regardless of when it actually happened. So increasing your withholding in November/December can retroactively cover your requirements for the entire year. It's a completely legitimate way to avoid penalties if you realize late in the year that you might come up short.

ESPP sales are actually a bit complicated. Companies usually withhold some taxes, but often only at a flat 22% rate for federal (regardless of your tax bracket). If you're in a higher tax bracket, that withholding might not be enough. Also, depending on if it's a qualifying or non-qualifying disposition, the tax treatment differs. Some of the gain might be taxed as ordinary income rather than capital gains.

That's good to know about the household expenses! For my situation, I do pay the mortgage, utilities, and other household costs for my home. If I can establish that one of my college kids considers my home their main residence when not at school, would I meet that requirement even if they physically spend more time at college and with their mom during breaks?

Yes, you would likely meet the requirement. The IRS looks at whether you pay more than half the cost of maintaining the home where your qualifying person lives. Since college dorms and temporary stays during breaks are considered temporary absences, what matters is that you maintain their primary home. As long as your college student considers your home their main residence when not at school, and you pay more than half the costs of maintaining that home, you should meet the requirement. I'd recommend keeping documentation to substantiate this - things like their permanent address on school records, driver's license, voter registration, and where they receive mail.

I had the same issue with TurboTax. I found that if you go back to the "Personal Info" section and manually select "Head of Household" instead of letting it calculate automatically, then proceed through the qualifying person questions again, it will stick. Sometimes the software doesn't correctly handle these college student temporary absence situations.

Careful with the home office deduction! I thought I could claim this too, but my accountant said if you're a W-2 employee (not self-employed), you can't take the home office deduction anymore after the 2017 tax law changes. Only applies if you're self-employed now.

You're absolutely right, and I should have been clearer. The home office deduction is only available if you're self-employed, an independent contractor, or gig worker. W-2 employees can't claim it anymore even if you work from home all the time. This was changed with the Tax Cuts and Jobs Act back in 2017. I'm self-employed so I still get to take advantage of it, but I shouldn't have assumed everyone's situation was the same. Thanks for the correction!

How do you know if they're separated correctly? My 1098 has a box for mortgage interest and another box for property taxes. Is that what you mean?

Did you have to deal with any local tax issues beyond state level? Our target firm has employees who would be working from Philadelphia which I know has its own wage tax. Any tips on tracking all these multi-state/local tax obligations?

Yes, local taxes were actually more problematic than state taxes in some cases. Philadelphia wage tax was exactly one we encountered - it's around 3.5% for residents and still applies even when working remotely for an out-of-state employer. The key to tracking multi-jurisdiction obligations was implementing a good workforce management system that logged employee locations. We use a combination of IP logging and employee self-certification of work locations. For tax compliance, we ended up subscribing to a specialized multi-state tax service that alerts us to filing requirements and due dates across all jurisdictions. Initially tried to handle it manually and missed several local tax filings that resulted in penalties.

Unfortunately, a 1031 exchange only applies to real property, not business entities like accounting practices. The goodwill and client lists that make up most of an accounting firm's value don't qualify. Your best bet might be an installment sale (using Form 6252) to spread the tax hit over multiple years.

Thanks for pointing this out! I have the brokerage's W-9 so I think I'm good on that front. The W-9 shows their business name and EIN, so I'll use that on the 1099-NEC. Was there any penalty when you had to reissue it to the correct entity?

I didn't face any penalties because I caught it early enough and issued a corrected 1099-NEC before any filing deadlines. The agent actually called me almost immediately after receiving it because they didn't want the income showing up on their personal return when it should go to the brokerage. As long as you're using the information exactly as it appears on the W-9 they provided, you should be fine. The W-9 is specifically designed to give you the correct information for tax reporting purposes. Since you already have their W-9 with the brokerage name and EIN, you're ahead of where I was!

That's seriously bad advice from your friend. Not filing required 1099s can result in penalties of $280 per form (for 2024), and if the IRS determines you intentionally disregarded the requirement, penalties can jump to $570 per form or more. The IRS computer systems automatically match income reporting, so when the brokerage reports the income they received on their tax return, the system will flag that they received income from you that you didn't report paying. That's an automatic red flag that can trigger further scrutiny of your returns. Plus, brokerages depend on receiving proper 1099s for their own accounting and tax filing. Not providing one creates problems for them and could damage your business relationship. It's just not worth the risk for something that takes a few minutes to do correctly.