Does the safe harbor rule apply even if you had zero tax liability the previous year? I was a student last year with almost no income.

Yes, the safe harbor rule still applies if you had zero tax liability the previous year. In fact, that's the best case scenario! If you had no tax liability last year, then 100% of your previous year's tax is zero, which means you technically don't need to make estimated payments this year to meet the safe harbor provision. However, this only protects you from underpayment penalties - you'll still owe the full tax amount when you file. So it's usually better to make the quarterly payments anyway to avoid a big tax bill all at once. This zero-liability exception only works for one year, so plan accordingly for next year's payments.

Yes, payment processors like PayPal, Stripe, and Venmo are required to report to the IRS if you receive more than $600 in payments for goods and services in a year. They'll send you a 1099-K form that you'll need to include when filing your taxes.

Do you have any issues with more complex returns in TaxAct Pro? I've got mostly simple returns but a couple clients with rental properties and small businesses. Can it handle K-1 forms?

I haven't run into any significant limitations with more complex returns. It handles Schedule E for rental properties very well, and I have several clients with small businesses filing Schedule C without issues. For K-1 forms, it processes them fine - I have a few clients with partnership and S-corp income. The only area where I've found it slightly less robust is with very complex investment situations or extremely complicated business returns with lots of unusual deductions. But for the typical small business owner, rental property investor, or individual with some investment income, it works perfectly well. The value for the price is excellent for a small practice.

FreeTaxUSA doesn't have a professional version that allows you to prepare multiple client returns under a practitioner account. It's really designed for individuals doing their own taxes, not professionals preparing returns for clients. You'd need software specifically designed for tax professionals that includes features like client management, e-filing capabilities under your EFIN, and professional liability protections.

Thanks for clearing that up! I was hoping there might be a free option, but I understand professional software would need those additional features. Guess I'll need to budget for one of the lower-cost options mentioned here.

Do you ever find yourself overpaying with this method? I'm worried about giving the IRS an interest-free loan if I calculate too conservatively.

I do sometimes end up overpaying slightly, but I personally prefer that to underpaying and facing penalties. In years when I've overpaid, I just apply the refund to next year's estimated payments. If you're concerned about overpaying, you might want to be more precise in your calculations. I typically use a rough estimate of my marginal rate plus state taxes (about 35% in my case), but you could use tax software to run a more accurate projection after each significant trade to get closer to the exact amount.

The quarterly tax system is technically "pay as you go," so each payment should reflect your income for that quarter. If you have minimal gains in early quarters and then a big gain later, you would make a larger payment for the quarter when you had the gain. You don't need to retroactively adjust earlier quarters.

What version of TaxAct are you using? I had the same problem until I realized I was using the "Free" version which doesn't support education credits properly. I had to upgrade to the "Deluxe" version to get the full education section where you can enter all the boxes from the 1098-T correctly.

I'm using the Deluxe version already, that's why I'm so confused. Maybe I need to update it? I'll try logging out and back in to see if that fixes it.

This is super helpful, thank you! I just checked again and found that section buried in the menus. You're right - the questions were there, but the software didn't prompt me to go through that section when I entered my 1098 information. I had to manually navigate to it. Is there any way to know what other important tax questions might be hidden like this? I'm worried about what else I might be missing.

I'm glad you found it! Unfortunately, this is a common problem with most tax software - they have the capabilities to handle complex situations, but don't always guide users to the right sections. For major deductions like mortgage interest, medical expenses, and business deductions, I always recommend exploring all the sub-menus manually rather than just following the guided workflow. Another approach is to run a "review" of your return before filing - sometimes the software will flag potential issues like this during the review process. One last tip: if you've already filed with the incorrect mortgage interest deduction, you might need to file an amended return (1040-X) to correct it. Given the loan amount you mentioned, it could make a significant difference in your tax liability.

I've used FreeTaxUSA for years and actually had a similar experience. For my rental properties, they were super detailed, but for my primary residence mortgage over $750K, I had to figure out the limitation myself and manually adjust the deduction. I think they assume users know about this limitation, which is obviously not realistic for most people.

That's interesting about FreeTaxUSA handling rental properties well but missing this for primary residences. Maybe I should give them another look for my rental property taxes next year. I think the core issue is that all these software companies make assumptions about what the average user knows about tax code. The reality is most of us are using tax software precisely because we don't understand all these details and limitations! We rely on the software to guide us through everything relevant to our situation.