How do you calculate how much extra to withhold from your day job to cover the self-employment stuff? Is there some formula or calculator for this?

I use the IRS withholding calculator on their website, then add about 15% of what I expect to make from my self-employment income to account for both income tax and self-employment tax. Then I submit a new W-4 to my employer requesting the additional withholding amount on line 4(c). I usually do this calculation twice a year to make sure I'm on track.

Does the IRS Direct Pay system give you some kind of receipt or confirmation you can save? I'm always worried about making these payments and them getting lost in the system somehow.

Wouldn't traditional IRA be better if they're trying to lower their current tax bill though? Roth doesn't help with that at all.

You're right that a traditional IRA would help lower the current tax bill, which is definitely an advantage if immediate cash flow is the primary concern. I suggested Roth because at $65k, OP is probably in the 22% tax bracket now, and many financial planners believe this is a relatively favorable rate to pay taxes at, especially for someone early in their career whose income (and potentially tax bracket) will likely increase. The long-term tax-free growth often outweighs the current tax deduction for younger earners. But it's definitely a personal decision that depends on individual circumstances and priorities.

The new W-4 doesn't use allowances anymore (changed in 2020). You now have to specify actual dollar amounts for additional withholding or reduction. Bit more complicated but more accurate.

Thanks for the correction! Shows how long it's been since I updated mine. Guess I need to look at the new form and figure out what numbers to put in there. Appreciate the info!

Does Etsy charge sales tax? I buy a lot of stuff from small creators there and never really paid attention to whether tax was included.

Etsy began automatically collecting and remitting sales tax in most states starting around 2019, but implementation rolled out gradually. For current purchases, they should be collecting the appropriate sales tax based on your delivery address. If you're calculating use tax for previous years, you'd need to check your receipts. Prior to their automated system, it depended on whether the individual seller collected sales tax, which varied widely. Small sellers below certain thresholds weren't always required to collect tax in all states.

Wait really? So if I went on vacation to Oregon (which has no sales tax) and bought a laptop there, I'd owe use tax in my home state when I got back?

Thanks for this advice! Looking at my notice now, I think there might actually be both types of penalties. Would I be eligible for FTA on both the late filing and late payment penalties? Or just one of them?

You can absolutely request First Time Abatement for both penalties! The FTA can cover failure-to-file, failure-to-pay, and failure-to-deposit penalties. Just make sure to specify in your request that you're asking for abatement of all penalties assessed for that tax year. Many people don't realize that multiple penalties can be covered under a single FTA request, as long as they're all for the same tax period. The important thing is to clearly identify all the penalty types in your request so nothing gets overlooked.

I tried using the online account for this last year and couldn't find any way to submit a penalty abatement request. Ended up having to call. The online services seem limited to viewing your account, making payments, and getting transcripts.

14 I'm in a similar situation as OP but my parents are refusing to amend their return. They paid for my college tuition for spring semester 2024 and think that means they can claim me, even though I lived on my own and paid all my other expenses. Will the IRS side with me?

3 The IRS will evaluate based on their dependency tests. The main ones are the support test (did you provide more than half of your own support for the year) and the residency test (where you lived). For college students, paying tuition doesn't automatically qualify someone to claim you as a dependent. If you provided more than half of your total support for the year (including housing, food, medical expenses, etc.), then you likely wouldn't qualify as their dependent even if they paid your tuition. Document all your expenses to show you supported yourself. The IRS will review both returns and make a determination based on the facts and documentation provided.

5 Is there any way to find out who claimed you as a dependent without calling the IRS? Can they tell you that information when you call?

11 The IRS can't directly tell you who claimed you as a dependent due to privacy laws, even if you call them. However, they can confirm whether it was someone who would logically have your information (like a parent or guardian) versus a complete stranger (suggesting identity theft). That's why it's important to first check with family members who might have legitimately claimed you. If everyone denies it, that's when you should suspect identity theft and take the steps I mentioned. The IRS will investigate both returns in that case and will contact you with their findings, which may include information about the fraudulent filer if they determine it was identity theft.