But this seems super unfair to people barely getting by. So the tax code basically says "ur so poor u dont owe taxes... unless ur self employed then pay up"?? Is there any way around this or any special credits for low income self employed people?

You make a good point about the seeming unfairness. There are actually some options that can help. You may qualify for the Earned Income Tax Credit (EITC) which is specifically designed for lower-income workers, including self-employed people. This credit is refundable, meaning you can get money back even if you don't owe income tax. Also, don't forget about business deductions. You can deduct legitimate business expenses from your self-employment income before calculating the 15.3% tax. This includes things like supplies, mileage, home office expenses, phone/internet costs used for business, etc. For many gig workers, these deductions can significantly reduce the taxable self-employment income, sometimes by 30-50% depending on your situation.

TurboTax does handle this correctly. I was in this situation and it asked if I had any self-employment income. When I entered my DoorDash earnings, it automatically added Schedule C and SE to my return. It also walked me through possible deductions like mileage and phone expenses that helped lower the self-employment tax I owed.

Thank you so much for this confirmation. I'm definitely going to find a new tax preparer. Quick follow-up - if I claim the standard mileage deduction, can I still deduct the cost of the new tires separately or is that considered included in the mileage rate?

If you use the standard mileage rate (which is typically the better option with high mileage like yours), that rate is designed to cover all costs of operating your vehicle including depreciation, maintenance, repairs, tires, gas, oil, and insurance. So no, you cannot separately deduct the cost of tires in addition to taking the standard mileage rate. However, you can still deduct other legitimate business expenses that aren't related to your vehicle operation, such as business supplies, a portion of your cell phone bill if used for business, business insurance, or any other ordinary and necessary business expenses.

I used TurboTax Self-Employed for a similar situation last year. When you get to the 1099-MISC section, just enter the information exactly as it appears on your form. Then when it asks about your business, create a Schedule C for your personal assistant business, and TurboTax will guide you through entering all your expenses including mileage. It worked perfectly - just make sure you choose the Self-Employed version not the cheaper ones.

That's actually really helpful to know about the safe harbor rule! So if I just take my 2022 total tax and divide by 4, I'm completely covered for this year? Even if I'm making significantly more this year than last year?

If your income for 2022 was below $150,000 (AGI), then yes, paying 100% of your 2022 tax spread across your four quarterly payments will fully protect you from underpayment penalties regardless of how much more you earn this year. If your 2022 AGI was over $150,000, you'll need to pay 110% of your 2022 tax to qualify for the safe harbor. It's a really useful rule when your income fluctuates or increases, especially for self-employed folks who might not know their exact income until the year ends.

Totally agree! And the instructions are written in the most confusing way possible. I'm convinced they do it on purpose so we mess up and they can charge penalties. I spent 3 hours just trying to figure out my first quarterly payment.

Thanks for bringing this up. The distribution code is definitely "1" for early withdrawal. And I never made after-tax contributions to this 401k - it was all traditional pre-tax money through my employer. I understand the 10% early withdrawal penalty gets calculated on my tax return, but I'm certain the federal and state income tax withholding should show up on the 1099-R. When I requested the distribution, Fidelity's system specifically asked how much I wanted withheld for federal and state taxes, and I selected the percentages. That withholding definitely happened because the amount deposited to my bank was significantly less than the gross distribution.

You're absolutely right - if you elected to have federal and state taxes withheld during the distribution process, those amounts should definitely be reflected on the 1099-R in boxes 4 and 14 respectively. Since you're certain withholding occurred and have bank statements to prove the net amount received, I'd recommend escalating this at Fidelity. Ask specifically for their tax reporting department rather than general customer service. You might also request to speak with a supervisor if the first person isn't being helpful.

This happened to me too! My 401k company sent TWO different 1099-Rs for the same distribution - one showing the gross amount and a separate one showing the withholding. Made absolutely no sense but that's how they did it. Definitely check if there's another form coming.

Can you still share access with your accountant in Quicken? That's one of the main features I use in QBO.

There's no direct accountant access like QBO offers. What I do instead is export tax reports as PDFs or Excel files and share those with my accountant quarterly. It's a bit more manual, but it works fine since my business is pretty straightforward. My accountant actually prefers getting my organized spreadsheets rather than digging through QBO themselves. But if your accountant is actively working in your books throughout the year, this might be a limitation for you.

I tried Wave but found the reporting really limited compared to QBO. Also had some issues with bank connections frequently breaking. It's decent for very basic needs though.

That's fair. I've had occasional bank connection issues too, but for a free option it's been reliable enough. The reporting has gotten better in recent updates, but definitely still not as comprehensive as QBO. For my small photography business it hits the sweet spot of "good enough" without any monthly fees.