Wait, I thought the federal health insurance penalty (individual mandate) was eliminated starting in 2019? Isn't it only certain states like CA, MA, NJ, etc. that still have penalties now?

You're absolutely right, and I should have been more clear. The federal penalty was indeed reduced to $0 starting in 2019 through the Tax Cuts and Jobs Act. What I should have specified is that certain states still maintain their own health insurance mandates with penalties, including California, Massachusetts, New Jersey, Rhode Island, and DC. If OP lives in one of these states, the income threshold exemption would still apply at the state level. If they're in a state without a mandate, then there would be no penalty at all regardless of insurance status.

This is a good point. I moved from Massachusetts to New Hampshire last year and got so confused because MA has a penalty but NH doesn't. Make sure TurboTax knows your correct state!

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.

Does your employer know you do this? I'm worried mine would think I'm violating some non-compete if I tell them I need extra withholding for my side business.

Your employer doesn't need to know why you're adjusting your withholding. When you fill out a new W-4, you can either claim fewer allowances or simply specify an additional dollar amount to withhold from each paycheck. There's no requirement to explain why you want more taxes withheld. Many people adjust their withholding for various reasons - maybe they have investment income, rental property, or just want a bigger refund. The payroll department processes the change without needing an explanation.

Where do you find the estimator? I've been all over the IRS site and can't find anything helpful.

I haven't been getting pay stubs! That's part of the problem - they just direct deposit the money and when I've asked for stubs they say "we'll email them" but never do. Is that even legal? How do I know if they're actually sending the money to the IRS if I don't get pay stubs?

That's concerning. Employers are legally required to provide either electronic or paper pay statements in most states. If they're not providing pay stubs, that's another red flag pointing to potential financial issues at the company. You can check if they're remitting your taxes by creating an account on the IRS website and viewing your wage and income transcript. It won't show real-time data, but you'll eventually be able to see if they're reporting your withholding properly. This is definitely a situation to stay on top of because if they're having financial troubles, tax withholding is often one of the first things struggling businesses stop remitting properly.

The IRS withholding calculator is definitely helpful but I found it confusing at first. Did you end up withholding enough to cover what you would owe? I tried using it but wasn't sure if I did it right.

Does that mean I'm in trouble if I sometimes move some of my inventory boxes around when I need to vacuum or clean? The space is definitely dedicated to my business but occasionally I need to shift things for maintenance.

No, you're not in trouble for basic maintenance activities like cleaning. That's considered a normal part of maintaining your business space. What the IRS looks for is whether the space serves a dual purpose. For example, if you're storing inventory in your bedroom where you also sleep, or using your living room couch for both business and personal activities, those spaces wouldn't qualify. But if you have boxes of inventory in a dedicated area and just move them temporarily to clean, that's perfectly fine.

I used TurboTax last year and it walks you through both methods and shows you which one gives you the bigger deduction. It asks for your total home square footage, the business-use square footage, and your expenses. Pretty straightforward. But honestly, I still got confused with some of the questions about "exclusive use" and partial room usage. Had to google a bunch of stuff that wasn't clear in the software.