Thanks, that's a good point about state requirements. My situation is actually a bit different from last year since I had a big job change plus the crypto stuff, so I'm not sure if last year's return would be helpful as a baseline. What other approaches would you suggest for estimating?

Since your situation changed significantly with both a job change and crypto, you're right that last year's return might not be as helpful. In that case, I'd suggest doing a quick calculation of your W-2 income and estimated tax liability from that (you can find tax tables online), then add an additional amount for crypto. For the crypto portion, even a rough estimate based on your trading volume would help. If you traded $10,000 in crypto with an average gain of 20%, you might set aside roughly 25-30% of those gains ($500-600) for taxes as a starting point. It's not perfect, but it shows good faith effort.

Same happened to my brother! He trades crypto too and just put $0 on his extension form thinking it was just a time extension. He ended up owing about $4k in taxes plus another $800 in penalties and interest. Definitely better to overestimate.

Yikes, that's exactly what I'm trying to avoid! Did you try calling the IRS to get the penalties removed or reduced? I've heard sometimes they'll work with you if it's your first time making this mistake.

Thanks for breaking it down so clearly! I've never filled out a W-9 before. Is there anything tricky about it that I should watch out for?

The W-9 is actually pretty straightforward. The main things to be careful about: Make sure you're using the current version of the form from IRS.gov - it's occasionally updated. Fill in your legal name (as shown on your tax return), not a business name unless you have one registered. For most independent contractors, you'll check the "Individual/sole proprietor" box. The trickiest part is deciding whether to provide your SSN or an EIN (Employer Identification Number). If you're just working as yourself, your SSN is fine. If you've set up a formal business structure, you might have an EIN to use instead.

This is why I use QuickBooks Self-Employed - it explains all this stuff and tells you what forms you need vs what forms others should give you. Helped me avoid so many headaches with clients who dont understand contractor taxes.

That doesn't sound right to me. Form 3115 is typically for changing how you account for things going forward, not fixing past mistakes. For unreported section 1256 contracts from a prior year, a 1040-X amendment should be the correct approach unless there's something unusual about your situation.

Thanks for that clarification. I went back and double-checked with my accountant, and you're right. He had confused my situation with another client who was changing their accounting method for an ongoing business. For my unreported section 1256 contracts, we're just filing a 1040-X amendment as you suggested. The Form 3115 would have been much more complicated and unnecessary for my situation. Really appreciate you pointing that out before I went down the wrong path!

Good news! If you're only trading section 1256 contracts (like SPX options) within an IRA or other tax-advantaged account, you don't need to worry about the mark-to-market rules or the 60/40 split. Those rules only apply to taxable accounts. In an IRA, all the gains and losses are essentially tax-deferred (or tax-free in a Roth), so there's no annual reporting requirement regardless of what investments you hold.

Thanks for the tip about checking the codes! My 1099-R definitely shows both P and J in Box 7. I'll make sure the software is reading both codes correctly. Did you end up having to file Form 5329 separately or were you able to include it with your regular return through the software?

You can include Form 5329 as part of your regular tax return through the software - no need to file it separately. Most tax software has a section for additional forms where you can find 5329. Just make sure you're selecting exception code 12 specifically for "removal of excess contributions.

I've done this exact thing for 3 years (kept making the same mistake with foreign income and Roth contributions) and never had an issue. As long as you have documentation showing you properly removed the excess contribution, you're doing exactly what the IRS procedures specify.

This is really helpful insider info! Do you think it's better to approach smaller local firms or larger regional ones for a small construction business? I've heard conflicting advice about which provides better personalized service.

For a small construction business, I generally recommend a mid-sized local firm rather than either extreme. The smallest firms (1-2 CPAs) often lack specialized industry knowledge and may not have the bandwidth during busy season. The largest firms typically focus on bigger clients and charge premium rates. A mid-sized local firm with 5-10 CPAs often hits the sweet spot - they typically have at least one person with construction industry expertise but still provide personalized service. They're also more likely to offer flexible billing arrangements like the flat fee model you prefer. Just make sure to ask specifically if they have other clients in construction and what percentage of their practice it represents.

I tried one of those matching services last year for my photography business. The experience was mixed - the price was better than local CPAs, but the person they matched me with didn't really understand state-specific deductions for my industry. I ended up having to explain a lot of things that I feel a more specialized CPA would have known. Might work if your situation is straightforward though.

Thanks for sharing your experience! That's exactly what I was worried about - the lack of specialized knowledge. My situation involves multiple state filings and industry-specific deductions, so it sounds like I might be better off continuing my search for a local CPA who understands my field, even if it costs a bit more.