Does contributing to a 401k automatically reduce withholding or do I need to put that on my W-4 somewhere? My HR person was useless when I asked.

401k contributions automatically reduce your withholding because they reduce your taxable income before taxes are calculated on your paycheck. You don't need to put this on your W-4 specifically. However, if you have other deductions like mortgage interest, charitable giving, or student loan interest that aren't reflected in your paycheck, you can estimate their annual total and put that amount on line 4(b) of your W-4 to reduce withholding further.

I tried both and they were ok but seemed to be pushing their paid services. The IRS withholding calculator is completely free and actually pretty good if your tax situation is straightforward. Doesn't work well with irregular income tho.

Creating an IRS account is a nightmare though. I tried to do this last year and they wanted me to verify my identity by entering information from a mortgage, car loan, or credit card - none of which I had at the time! Ended up having to mail in a form and wait 10 days for a verification code.

That's a good point about the verification process. It can be difficult for some people to create an account. If you can't access your transcript online, calling the IRS transcript request line at 800-908-9946 is another option. They can mail your transcript to your address on record. The most important thing is confirming whether an extension or return has actually been filed under your SSN before worrying about potential identity theft or duplicate payments. This information can help determine your next steps.

I tried to pay about $2,700 which was what TurboTax estimated I would owe based on the information I entered so far. I understand extensions only give more time to file, not pay - that's why I attempted to submit the payment with my extension request. I'm just worried about where that money went since the extension was rejected!

This is such an important point that people miss! I've seen so many friends get hit with penalties because they thought filing an extension meant they didn't have to pay until October. The interest and penalties on unpaid tax can add up fast - I think it's something like 0.5% per month plus interest.

That's actually a really smart system! Do you use any specific app or method to keep track of all your expenses throughout the year? I've just been keeping random receipts in a shoebox which probably isn't ideal lol.

I use a basic spreadsheet for tracking expenses, but I also take pictures of all receipts with my phone and organize them by month in a cloud folder. Way better than the shoebox method (which is what I started with too)! For mileage specifically, I recommend a dedicated app like MileIQ or Everlance that tracks your trips automatically. They're worth every penny come tax time since mileage is usually the biggest deduction for delivery gigs.

This is super helpful! Is there any specific wording you'd recommend using when requesting the waiver for a first-timer with self-employment income?

Thanks for mentioning the VCSP program. I'll definitely look into that along with Schedule H. Would you recommend I also file the SS-8 form, or is that something my babysitter would need to do? And do I need to worry about state taxes too, or just federal?

The SS-8 form is typically filed when there's a dispute about worker classification. Since you both agree she's a household employee, you probably don't need to file it. It's more important to focus on the Schedule H and getting caught up on the employment taxes. Yes, you absolutely need to look into state taxes as well. Most states have their own version of unemployment taxes for household employers, and the thresholds can be different from federal requirements. Check with your state's employment department as soon as possible, as they may have separate filing requirements and potential penalties.

Would the Child and Dependent Care Credit still apply if the babysitter was watching my sister's kids at my house? I paid her but they weren't my dependents.

No, the Child and Dependent Care Credit only applies if you're paying for care for your own qualifying dependents (your children under 13 or disabled dependents/spouse). If you were paying for childcare for your sister's children and they aren't your dependents, you can't claim the credit. Your sister might be able to claim it though, if she can document that she reimbursed you for the childcare expenses and meets the other requirements for the credit.

Do you have a template for this spreadsheet you could share? I've been trying to figure out how to set one up but I'm not sure how to structure it with multiple income sources.

I don't have a shareable template, but here's how I structure mine: I create columns for each income source, then rows for each pay period. I sum these up to get my projected annual income. Then I calculate my taxable income (after standard deduction) and use the tax brackets to estimate my tax liability. I compare this to the total withholding from my pay stubs to see if I'm on track. The key is to update it after each paycheck so you can make adjustments to your withholding if needed. If you're not comfortable with tax brackets, there are IRS withholding calculators online that can help estimate your total tax more accurately.

But don't you need separate bank accounts for each type of business activity even with one LLC? I heard mixing business funds can create problems.