Does this calculation change if you have an S-Corp instead of a sole proprietorship? I thought S-Corp owners don't pay SE tax on all business income?

You're right - with an S-Corp the calculation is different because you're only paying SE tax (actually FICA taxes in this case) on your reasonable salary, not on all business profits. In an S-Corp scenario, the depreciation deduction would still reduce your overall business income, but may not have the same SE tax savings as with a sole proprietorship where every dollar of business profit is subject to SE tax. However, you'd still get the income tax savings from the deduction. That's why some tax professionals recommend buying and taking large upfront deductions for sole proprietors, but might have different recommendations for S-Corp owners.

Yes! I got both for my business Tesla Model Y last year. The clean vehicle credit has some income limitations and vehicle price caps, but if you qualify, it's a straight $7,500 credit on top of your business deductions. The vehicle has to be under $80K for SUVs to qualify. Just remember that the business percentage applies to the depreciation/expenses, but the full clean vehicle credit applies regardless of business use (as long as you qualify based on income, etc).

That's awesome! Do you know if leasing an EV would still qualify for these benefits? I'm not sure I want to buy outright.

I didn't even think about that! Are there any specific thresholds I should be aware of that a 5% bonus might push me over? With my $62,000 base plus roughly $3,100 bonus, I'll be at about $65,100.

At your income level of around $65,100 after the bonus, you're still well within most common phaseout ranges, so I wouldn't be too concerned. The student loan interest deduction begins to phase out at $75,000 for single filers (2024 figures), and the Roth IRA contribution begins phasing out around $138,000. The Saver's Credit could be affected if you're close to the threshold, which is $36,500 for single filers, but you're well above that already. Child Tax Credit phaseouts start at much higher income levels ($200,000 for single filers), so those shouldn't be affected either. Overall, your 5% bonus is unlikely to push you over any significant tax benefit thresholds.

Yep, happened to me too. My company gave us all "holiday gifts" that were actually bonuses but only withheld like 10%. Tax time was NOT fun. Now I always set aside extra whenever I get any kind of bonus or extra payment just to be safe.

Would it be bad to change it to 1 halfway through the year? I've been at 0 since January.

Not bad at all! You can change your withholding at any time during the year. If you switch from 0 to 1 allowance now, you'll just start having less tax withheld from your remaining paychecks this year. The withholding system is designed to adjust throughout the year. Your employer calculates the withholding for each individual paycheck based on your current W-4 information, not based on what you submitted in January. So making the change now just affects your future paychecks - it doesn't retroactively change anything.

This is the most likely answer. I remember the shock when I went from my $12/hr campus job to my first salaried position. Suddenly I was seeing hundreds in taxes instead of like $30-40 per check. Welcome to adult life lol

I think I still have my last paystub somewhere! Would the numbers on it match exactly what would be on my W-2 or are there sometimes differences? And is the tax software option something the IRS accepts as official?

The numbers on your last paystub may be close but not always exactly the same as your W-2. Sometimes there are year-end adjustments or benefits that affect the final numbers. Your paystub should show your gross wages, federal and state tax withholding, and Social Security and Medicare taxes withheld. Most tax software won't let you e-file without actual W-2 information, but you can use your paystub to file a Form 4852 (Substitute for W-2) if you absolutely cannot get your W-2. This is accepted by the IRS, but you should make every effort to get the actual W-2 first as filing with incorrect information could require you to file an amended return later.

Yes, you should still file. Even if you made under the filing threshold, you may be entitled to a refund of taxes that were withheld from your paychecks. Also, cash tips are still taxable income that legally needs to be reported.

I had a great experience at my local office. The representative printed my full account transcript and walked me through every code and adjustment. So much easier than trying to figure it out myself. Just make sure you bring photo ID and your tax return copy.

Thanks for the tips! I'll definitely call to make an appointment first. Good to know about bringing ID and my return copy too - wouldn't have thought to bring the actual return. I appreciate the advice about Form 8082 as well. I'll ask about that when I go in if I need to dispute anything. Three months isn't great but better than never resolving it!

I don't think I have any federal debts, but I hadn't considered that possibility. Is that something that would show up on the transcript with that specific code?

Yes, code 898 specifically indicates a refund offset. There will usually be an explanation with it showing what type of debt it was applied to (student loans, child support, etc.). There should also be a separate notice sent from the agency that received the money, but those sometimes arrive weeks after the IRS notice. If it was offset to pay a federal debt, you'd need to contact whichever agency received the payment (Dept of Education for student loans, Health & Human Services for child support, etc.) rather than the IRS, since the IRS just transfers the money but doesn't manage those debts.