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The pricing varies so much depending on where you live! In my HCOL city, I paid $1200 for a similar situation (my consulting LLC and husband's W-2), which seemed reasonable for our area. But friends in smaller towns paid half that. Where are you located? That could be affecting the price.
This is true! I'm in rural Missouri and pay $450 for my photography business taxes. My sister in Chicago pays almost triple for basically the same service.
Regardless of who you go with next year, start keeping REALLY good records now! I use QuickBooks Self-Employed ($15/month) to track all my business expenses, mileage, etc. Having organized records cut my tax prep fee by almost 40% because my accountant didn't have to sort through a shoebox of receipts. Even if you DIY, good bookkeeping makes everything easier.
Check your engagement letter! When you hired the CPA, you should have signed an engagement letter that outlines their responsibilities and limitations of liability. Some CPAs include clauses that limit their liability to the amount of fees paid, while others might have more comprehensive coverage for negligence. If they're a reputable CPA, they should make this right without you having to take further action. I'd start with a formal letter (not just an email) outlining the situation, your documented communications, and the financial impact of their negligence. Request specific compensation and give them a reasonable deadline to respond.
I just dug through my paperwork and found the engagement letter. There's a clause saying they're "not responsible for penalties or interest charged due to delays" but nothing specifically addressing refunds lost due to their negligence. Does this mean I don't have any recourse?
That clause is primarily intended to cover situations where the client provides information late or there are other factors outside the CPA's control. In your case, they had all the necessary information and explicitly confirmed they would complete the work by the deadline - then failed to do so without any valid reason. This is a clear case of professional negligence that goes beyond the scope of a standard limitation clause. The fact that they acknowledged the deadline and committed to meeting it, then simply didn't do the work, strengthens your position considerably. I would still pursue compensation despite that clause, as courts have often found that professionals cannot contract away basic duties of care and competence.
One thing nobody's mentioned - have you checked if your state has any penalty abatement options? Some states will waive late filing penalties if you can demonstrate "reasonable cause," and reliance on a tax professional who failed to file on time often qualifies. I'd contact your state tax department directly and explain the situation. Bring documentation showing that the CPA had your information and committed to filing by the deadline. States can be more flexible than people realize, especially when the failure to file wasn't your fault.
This is good advice - I went through something similar in California and was able to get penalties waived by providing emails showing my accountant had everything needed well before the deadline. I had to fill out a formal abatement request form and include my evidence.
One thing nobody mentioned yet is that if you donate appreciated stocks or assets you've held for more than a year, you get an EVEN BETTER tax benefit! You get to deduct the full fair market value AND you don't pay capital gains tax on the appreciation. It's like double-dipping on tax benefits!
Can you explain this with an example? I'm not sure I understand how the math works out.
Sure! Let's say you bought stock for $1,000 several years ago, and now it's worth $2,500. If you sold it, you'd pay capital gains tax on the $1,500 profit - which might be $225 if you're in the 15% capital gains bracket. Instead, if you donate that stock directly to charity, two things happen: First, you get a deduction for the full $2,500 current value (if you itemize). Second, you completely avoid paying the $225 in capital gains tax you would have owed if you sold it. So compared to selling the stock and donating cash, you save an extra $225 in taxes.
Im confused about the CARES Act. My neighbor said there was some special deduction for charitable donations even if I take the standard deduction. Is that still a thing for 2025 taxes???
Unfortunately, that special provision expired. During the pandemic, the CARES Act allowed people to deduct up to $300 ($600 for married couples) in charitable donations without itemizing. But that was temporary and is no longer available for current tax years. For 2025, you'll need to itemize deductions to get any tax benefit from charitable giving. That said, it's always worth checking for new tax laws as we get closer to filing season, as Congress occasionally introduces new provisions.
Just an extra tip - if you've been using FreeTaxUSA for multiple years, you can actually go back and look at your 2019 Schedule A to see exactly how much state income tax you deducted. Look at line 5a. This will help you understand how much of your refund might be taxable. Also remember that if you didn't receive any tax benefit from the deduction (like if you were close to the standard deduction amount), then the refund isn't taxable. The worksheet helps figure this out.
Where do you find old returns in FreeTaxUSA? I've been using them for years but never figured out how to see my past filings.
You need to log into your FreeTaxUSA account, and on the main dashboard there should be a section called "Prior Year Returns" or "Tax Return History." Click on that and you'll see all the years you've filed with them. Select 2019, and you can view or download the full PDF of that return. If you downloaded and saved your returns each year, you can also just open the PDF directly from your computer. The Schedule A is usually around page 11-13 of the complete return.
Is this 1099G thing only an issue if your state refund is large? I got like $340 back from state taxes for 2019 but never received a 1099G. Should I be worried??
States are required to issue 1099-Gs for all refunds they send, but sometimes they don't if the amount is very small. $340 is actually right around the threshold where some states might not bother. Technically you're still supposed to report it if you itemized that year, but realistically the tax impact would be very minimal.
Madison Tipne
19 Don't feel bad about not understanding this stuff! I'm 32 and only figured out self-employment taxes last year after getting hit with a huge bill. Here's my super simple explanation: The $400 limit is for the ENTIRE YEAR after your business expenses are subtracted. So if you make $5,000 from freelancing but spend $1,000 on legitimate business expenses, your "net profit" is $4,000. If that net profit is over $400 for the year, you need to pay self-employment tax (which is just Social Security and Medicare taxes). It's about 15.3% of your profit. And yes, it's ridiculous this isn't taught in school! I've learned everything the hard way too.
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Madison Tipne
β’1 Thanks for breaking it down! Do you know if I need to make quarterly tax payments? I'm so confused about that part too.
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Madison Tipne
β’19 If this is your first year of self-employment, you generally don't have to make quarterly payments. But for next year, if you expect to owe $1,000 or more in taxes, you'll need to make quarterly estimated payments. A good rule of thumb is to set aside 25-30% of your profit for taxes. This covers both the self-employment tax (15.3%) and your regular income tax. You can adjust this based on your personal tax situation.
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Madison Tipne
4 Does anyone know a good app for tracking self-employment income and expenses? I'm trying to stay organized but my system is basically just a mess of screenshots and notes on my phone right now lol
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Madison Tipne
β’16 I use QuickBooks Self-Employed and it's been pretty good. You can link your bank accounts and it helps categorize everything as business or personal. It also calculates your estimated quarterly taxes which helped me a ton with that $400 threshold confusion.
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