But in this case wouldn't it be better to file for an extension first, then sort out the W-2 situation? That way there's no late filing penalty while they're trying to get the missing information.

This is good advice! There are also secure document apps specifically for this purpose that encrypt your tax documents. I started using one after having a similar issue a few years back.

I used QBSE for 2 years and switched to FreshBooks. Much better interface and their expense tracking is more intuitive. Plus it doesn't do that thing where QB tries to upgrade you constantly.

Does the 30% usually cover everything? My brother mentioned something about additional self-employment tax on top of regular income tax...

The 30% is usually enough to cover both income tax and self-employment tax for most income levels. Self-employment tax is about 15.3% (covers Social Security and Medicare that an employer would normally pay half of), and then your income tax rate depends on your total earnings. If you're making over $90k or so, you might want to set aside closer to 35% to be safe. I've found 30% works well for me earning between $60-80k annually. The first year is the hardest - after that you'll have a better idea of your actual tax rate based on your specific situation and deductions.

Thanks for mentioning this! I didn't even consider that there might be updated tables for 2025. Where can I find the most current versions? Is there a specific publication number or section on the IRS website?

You can find the most current withholding tables in Publication 15-T for 2025, which should be available on IRS.gov in the Forms and Publications section. The direct URL would be something like irs.gov/pub/irs-pdf/p15t.pdf (though you might need to update the year in the URL). I'd also recommend checking the IRS's Tax Withholding Assistant for Employers tool, which gets updated with the latest formulas and tables. That's probably the most foolproof way to ensure you're using the current information.

I noticed this too! I think it's because the Excel spreadsheet might be applying the withholding slightly differently. When I tested with my info (married filing jointly, $120k combined), the Excel sheet withheld about $37 more per paycheck than what I calculated with the 15-T tables.

Thanks for confirming! I wonder if this is intentional by the IRS to make sure people don't underwithhold. When I think about it, that $43 per check adds up to over $1,100 annually, which seems significant enough that it can't just be a rounding error.

17 Do you know how long it typically takes for amended returns to be processed? I'm in a similar situation and worried about how long I'll be in tax limbo.

5 Right now amended returns are taking approximately 16-20 weeks to process according to the IRS website. However, in my experience with a similar situation, it took closer to 6 months because they had to process both years together. I recommend filing the amendments electronically if possible because paper amendments take even longer. Also, make sure you don't file your actual 2020 return until the amendments are fully processed, or it might create further confusion. You can request an extension if needed to give time for the amendments to clear the system.

9 I used the Taxpayer Advocate Service last year for a similar issue. You need to demonstrate that you're facing "significant hardship" as a result of the IRS delay. In my case, I was being denied a mortgage because of the incorrect tax filing. The advocate was helpful, but it still took about 2 months to resolve after they got involved. You can request assistance through Form 911 or by calling them directly.

2 Thanks for sharing your experience. My situation might qualify as a hardship since I'm unable to get approved for student loans because of this tax filing mess. I'll look into Form 911. Did you submit yours online or did you have to mail it in?

That's really helpful info! My AGI is around $95k so it sounds like I would qualify. Do I need to do anything special to claim these losses, or does it happen automatically when I file Schedule E?

It should flow through automatically when you complete Schedule E and Form 1040. The key is that you need to be "actively participating" in rental management decisions (which it sounds like you are). The tax software should handle this calculation, but just make sure the loss from Schedule E is being applied against your other income on your 1040. One caveat - if you use a property manager and aren't making most of the management decisions yourself, you might not qualify as "actively participating," so keep that in mind.

And remember that if you do keep part of the pet deposit for damages when a tenant moves out, you can offset that income with the actual cost of repairs! So if you keep $300 of a deposit but spend $300 fixing chewed baseboards, it's a wash for tax purposes.