My wife does have access to a Dependent Care FSA through her company, but we weren't sure if it made sense to use it since I'm self-employed. Would this be better than the Child and Dependent Care Credit you think? We're probably in the 24% bracket if that matters.

At the 24% tax bracket, the Dependent Care FSA would likely be more beneficial. With the FSA, you'd save 24% federal income tax plus 7.65% FICA on up to $5,000, potentially saving around $1,583. The Child and Dependent Care Credit at your income level would probably be at the 20% rate, giving you a maximum credit of $1,200 for two or more children (20% of $6,000). The FSA is generally the better choice for higher-income families, plus it reduces your FICA taxes which the credit doesn't do. Your wife's employment status is what matters for the FSA eligibility, so you being self-employed doesn't affect your ability to use her employer's FSA. Just make sure to coordinate this with your tax planning since you can't use the same expenses for both benefits.

I've been using TaxSlayer Self-Employed for my home consulting business and it's been surprisingly good for the price. Much better questionnaire for finding business deductions than the big names, especially for home office stuff.

Do you know if Texas requires a separate form? I've got an LLC there but can't figure out if I need to do anything special for the state since they don't have personal income tax, but do have that franchise tax thing.

Texas is a bit different since they don't have personal income tax. For a single member LLC in Texas, you're right about the franchise tax. If your LLC's revenue is over the threshold (currently $1,230,000), you need to file a franchise tax report by the due date or request an extension. For the extension in Texas, you'd file Form 05-164 and make any required payment. Even if you're below the no-tax-due threshold, you may still need to file a "No Tax Due Report" by the deadline or request an extension. The Texas Comptroller's website has detailed information specific to your situation.

I tried TurboSelf last year for my LLC extension and it was okay but not great. It handled the basic Form 4868 fine, but wasn't very helpful with calculating a good estimated payment amount. I ended up overpaying by almost $2,000 because it used a very conservative calculation method. Their support was also really slow to respond when I had questions about how to properly categorize some business expenses that would affect my payment amount. I think there are better options out there specifically for small business owners.

I didn't even think about state taxes! Do you know if most states follow the federal rules for the $250k exclusion or do they have their own systems?

Most states do follow the federal capital gains exclusion rules, but there are definitely exceptions. For example, Massachusetts has its own rules that sometimes differ from federal treatment. It's also worth checking if your state has any special forms for reporting real estate transactions. My state required an additional form that wasn't part of the federal return. Your state's tax department website should have information specific to your location.

Yes, if you claimed a home office deduction, it can affect your capital gains exclusion. When you take a home office deduction, that portion of your home is considered business use, not personal use. If you claimed a home office deduction for part of your home, you may have to pay taxes on the gain allocated to that portion of your home, even if the gain on the residential portion is excluded. It's proportional - so if 10% of your home was used as an office, 10% of the gain might be taxable regardless of the exclusion.

Thanks for explaining that. I only used about 8% of the house as my office, so it sounds like a small portion might be taxable. I'll make sure to track that separately when I file.

What firm did you use? I've been hesitant about some of these ERTC specialist companies because there seem to be so many pop-up firms just chasing these claims and I'm worried about getting aggressive advice that could cause problems later.

I used a regional accounting firm in our area that already handled our regular tax work, not one of the ERTC mills that appeared overnight. That's exactly why I suggested finding a professional - too many firms are pushing aggressive positions without considering the documentation needed to support them. If you already have a CPA or tax preparer, ask if they have ERTC experience or can refer you to someone reputable. The best protection is having a tax professional who will stand behind their work and be there if questions come up later. The firms that properly document reasonable basis positions are worth their weight in gold right now with all the ERTC scrutiny.

Yeah my claim from October is still "processing" even though the IRS cashed the check for the quarter I had to pay additional tax on. Feels like they're just sitting on these claims hoping people forget about them.

Doesn't that mean you're overwithholding though? Wouldn't you end up with a massive refund? I'm trying to get mine as close to zero as possible.

You're right that it might result in slightly overwithholding, but in my experience it wasn't a massive refund - just enough to feel safe. The reason is that not all your income is taxed at your highest bracket rate because of how tax brackets work. Only the portion above each threshold gets taxed at the higher rate. So while it's not perfectly calibrated, it's a simple approach that errs on the side of caution. I'd rather get a small refund than owe money and potentially face penalties.

I tried it and it worked pretty well! The key is you ONLY fill out that worksheet and put the extra withholding amount on your highest-paying job's W4 (Step 4c). For your other jobs, you just fill out the basic info but don't do any adjustments. The worksheet basically calculates the additional tax you need to withhold to make up for having multiple jobs, then concentrates it all on one paycheck. It seems weird at first but makes sense when you think about it.