I'm worried a payment plan wouldn't be affordable given the total amount I owe. With $175k in tax debt, even spread over 6 years, that's almost $2500 a month not including interest. Is there any flexibility on the payment amounts? Did they look at your actual expenses when determining what you could pay?

They absolutely look at your expenses, but they use their own standards for what's "reasonable" which can be frustrating. For example, they have limits on housing costs based on your county. There's also something called a Partial Payment Installment Agreement (PPIA) where you pay what you can afford based on your financial situation, even if it won't fully pay off the debt before the collection statute expires. It's less drastic than an OIC but more flexible than a standard payment plan. In my case, I'm paying $400/month which won't cover the full amount, but it was what the IRS determined I could afford.

This is risky advice. Tax debts have very specific rules for discharge in bankruptcy. The taxes need to be from returns due at least 3 years ago, filed at least 2 years ago, and assessed at least 240 days ago. Plus, fraud or willful evasion makes them non-dischargeable. OP shouldn't count on bankruptcy without consulting a bankruptcy attorney who specializes in tax issues.

Is the home office deduction really worth it? I heard it can trigger audits. Also, for driving - can I just estimate how much I drove or do I need like a detailed log?

The home office deduction being an audit trigger is mostly an outdated myth. The IRS has simplified this deduction in recent years. As long as you have a space used "regularly and exclusively" for business, it's a legitimate deduction. Just be honest about the percentage of your home it represents. For mileage, estimates won't cut it if you're ever audited. You need a log with dates, starting/ending mileage, and business purpose. Several free apps can track this for you automatically. The standard mileage rate for 2024 is pretty generous, so this can be a significant deduction if you drive frequently for business.

Try Wave Accounting - it's free and way simpler than QuickBooks. I'm not super financially savvy and found it pretty easy to use for my small shop. The reporting features make tax time so much easier.

But isn't there some education credit we can claim against grant money? I remember someone telling me you can deduct research expenses or something?

There's a difference between tax credits for education and how you handle grant money. You might qualify for the American Opportunity Credit or Lifetime Learning Credit based on your educational expenses, but that's separate from how you report your grant. For research expenses, if your grant is specifically for research and you have expenses directly related to that research, those expenses may offset the taxable portion of your grant. Keep all receipts for lab supplies, research materials, travel to research sites, etc. The rules get complicated though, so documenting everything is important. The key distinction is whether the grant required you to perform services (like research work) or was simply awarded to support your education.

I used FreeTaxUSA instead of TurboTax for my fellowship grant. There's a specific section for scholarships and grants not reported on a tax form. Much easier than TurboTax for this situation!

Thanks for this explanation! I checked and my withholding in Box 2 was $15,980 and my total tax on Line 24 was $15,600, so the math does check out for the $380 refund. I guess I was just expecting more because I've always gotten bigger refunds before. Is it normal for the refund to vary this much from year to year? Last year I got back around $2,400.

The big difference between last year's $2,400 refund and this year's $380 is worth investigating. Something significant changed in either your withholding or your tax situation. Most likely explanations: 1) You updated your W-4 withholding form last year and it's now more accurate, 2) You had additional tax credits or deductions last year that you didn't have this year, or 3) Your income increased putting you in a higher tax bracket while your withholding didn't increase proportionally. I'd recommend comparing last year's return line by line with this year's to spot the differences.

Not a waste at all. I tried doing my own taxes for years and always stressed about making mistakes. My tax guy catches things I would miss and the peace of mind is worth every penny. Plus, he's available if I get any letters from the IRS.

I agree with you. I've been doing my own taxes for years with just W-2 income using FreeTaxUSA. It's like $15 for state filing and federal is free. The software walks you through everything and double-checks for errors. Plus you learn how taxes actually work instead of just handing everything over to someone else.

Even with guides, I always worry about missing something important. Does TurboTax actually guide you through the backdoor Roth process well? Which version do you need to handle this correctly?

TurboTax Premier handles backdoor Roth conversions well. The software will ask if you made contributions to a traditional IRA, and you indicate they were non-deductible. Later, it asks about conversions to Roth IRAs. Just make sure you have the exact dates and amounts for both transactions. The most important thing is understanding the concept beforehand so you recognize if something doesn't look right. The software generates Form 8606 automatically, but I always review it to ensure it shows the non-deductible contribution basis correctly. Many online guides show what the completed form should look like for comparison.

I had the exact opposite experience. Found a local CPA who specializes in small businesses and she found so many legitimate deductions I didn't know about. Sometimes it's worth paying more for actual expertise instead of the chains. Maybe try searching for someone who specifically works with your industry?