Did both of you need to check the box in Step 2, or just one of you? I've read conflicting things about this and don't want to withhold too much either.

We both checked the box, but I've since learned that was actually withholding too much. The correct approach is for only one spouse to check the box, not both. We ended up over-withholding a bit which is why we got that small refund. The safest approach is to use the IRS Tax Withholding Estimator online. It will give you specific instructions for each spouse's W-4. Usually it tells one person to check the box and the other not to, plus suggests additional withholding amounts if needed.

I've used both and honestly the IRS one is better. The TurboTax one tries to upsell you on their paid tax prep services and doesn't give you as detailed instructions for filling out the W-4. Save your money and just use the free IRS Tax Withholding Estimator.

I actually have been thinking about that! How hard was the process of working with a foreign employer while in California? Did they handle the state tax withholding properly or did you end up with surprise tax bills?

The foreign employer had no idea how to handle California taxes. They didn't withhold anything for state taxes, so I had to make quarterly estimated tax payments to the California Franchise Tax Board to avoid penalties. I got hit with an underpayment penalty the first year because I didn't realize I needed to do this. If you stay in California, definitely set up quarterly estimated payments right away. The FTB is much more aggressive than the IRS about collecting penalties! Also, document everything about where you physically work - California has been known to audit people who claim they've moved to Nevada but still actually work in California.

Good point. I negotiate a USD equivalent with my foreign employer that gets adjusted quarterly. Protects against big swings. Swiss franc is usually pretty stable tho.

Wouldn't I still be personally liable as a sole proprietor though? That's my biggest worry - if someone gets hurt at one of our events or something else goes wrong, I don't want to risk my personal assets.

Yes, you would be personally liable as a sole proprietor - that's the main drawback. If liability protection is your primary concern, then an LLC does make sense. In that case, I'd still recommend keeping it as simple as possible with a single-member LLC unless your friends are insisting on being official partners. Make sure you get proper event insurance regardless of your business structure. Even with an LLC, if something goes wrong at an event, having good insurance is often more practically important than your business structure, especially for small businesses where people sometimes accidentally "pierce the corporate veil" by mixing personal and business finances.

S-Corps are so overrated for small businesses. The accounting and payroll costs eat up any tax savings unless you're clearing like $75k+ in profit. Plus you have to run actual payroll every month which is a pain.

I tried looking at their help articles but they're not very detailed about my specific situation with multiple 1099s. Did you have multiple income sources? Also, did you find their interface for business expenses intuitive?

I had three different 1099s last year from different clients. Their help articles on combining multiple 1099 forms on Schedule C were really helpful. You just need to enter each 1099 separately, and the software combines them correctly. For business expenses, I wouldn't call it super intuitive, but it's organized by categories that match the Schedule C form. The trick is to pre-categorize your expenses before you start (office supplies, software, equipment, etc.). Make a spreadsheet first with everything sorted, then the data entry goes much faster.

Do you pay the quarterly estimates online or mail in the vouchers? I've been confused about which is better.

If they file an extension, do they miss out on getting their refund until October? I'm confused about how that works with the payment vs. filing distinction.

If you're expecting a refund, you won't get it until after you file your complete tax return. So yes, filing an extension would delay your refund until whenever you actually submit your completed return (which could be anytime between now and October 15th). The distinction is important for people who owe taxes. The extension gives you more time to complete the paperwork, but you still need to pay what you estimate you owe by the original deadline to avoid penalties and interest. But since you mentioned having a new child and home purchase, there's a good chance you qualify for additional credits and deductions that might result in a refund.

I used FreeTaxUSA last year when we bought our house! It was actually pretty good for the price. The interface isn't as slick as TurboTax, but it walks you through everything step by step. The only thing is you have to know what forms you need - it doesn't really give advice about your specific situation like a human preparer would. But for $7 it was totally worth it.