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I've been using freetaxusa's calculator for years. Not the most elegant but it's free and has handled my dividends and capital gains just fine. The only thing is you need to input a lot of information to get to the final calculation page, almost like you're actually preparing a return, but you don't have to pay anything unless you actually file.
Do you have to create an account with them to use the calculator? I'm trying to avoid giving out my email to every tax site.
Yes, you do need to create an account, but you can use a throwaway email if you want. They don't verify it for just using the calculator features. The benefit though is that once you create an account, it saves your scenarios so you can come back and tweak them later without starting over. I've found that super helpful when playing with different investment decisions throughout the year.
Has anyone tried the IRS's own tax calculator? They have one called the Tax Withholding Estimator on the irs.gov site. I've used it for basic income but not sure if it handles investments well.
The IRS Tax Withholding Estimator is mostly for W-2 employees to figure out the right withholding amount. It does a terrible job with investment income in my experience. It doesn't distinguish between qualified and non-qualified dividends or long-term vs short-term capital gains. Basically useless for what the OP is asking about.
One thing I learned the hard way - if your PayPal account is registered as a personal account rather than a business account, switch it NOW. PayPal has been cracking down on people using personal accounts for business transactions and can freeze your funds. Also, you might want to look into getting a separate bank account for your business income. It makes tracking expenses WAY easier come tax time, and it's what my accountant recommended when my side hustle started making regular money.
Make sure you're putting aside enough for taxes as you go! When I started my side hustle, I didn't save anything and got DESTROYED at tax time. Now I automatically move 30% of all my side income into a separate savings account the moment I get paid. The self-employment tax (15.3% for Social Security and Medicare) on top of regular income tax is what catches most people off guard. Plus, your side hustle income might push you into a higher tax bracket for your overall income. Also worth noting - you might qualify for the Qualified Business Income deduction which can give you a deduction of up to 20% of your net business income. Definitely look into that!
Another thing worth mentioning about the IP PIN - you need to make sure your address is updated with the IRS if you've moved recently. I moved last year and didn't update my address with the IRS (only with USPS), and my IP PIN letter went to my old address. When I tried to file, I realized I didn't have the PIN and couldn't retrieve it online because the system was down. Ended up having to file a paper return which took almost 6 months to process and get my refund. Lesson learned: Keep your address updated directly with the IRS, not just with postal service forwarding!
Is there an easy way to update your address with the IRS? I just moved last month and didn't even think about this issue.
There are a few ways to update your address with the IRS. The easiest is probably submitting Form 8822 (Change of Address) directly to the IRS - it's a simple one-page form you can download from their website. You can also update your address when you file your next tax return, but that might be too late if you've already moved and are waiting for important documents like your IP PIN. Another option is to call the IRS directly, but as others have mentioned in this thread, getting through can be challenging during busy periods.
Quick question - I've heard that getting an IP PIN means your returns will be processed more slowly. Is that true? I usually get my refund pretty quickly and don't want to delay things if I don't have to.
That's actually a misconception. Having an IP PIN doesn't slow down the processing of your tax return as long as you enter it correctly when filing. In fact, it can potentially speed things up because your return won't be flagged for additional identity verification that might otherwise be triggered.
One important thing no one has mentioned - when you file a 1040-X claiming a refund, make sure you file it within the refund statute of limitations. You generally have 3 years from the original filing deadline to claim a refund. So for 2024 taxes, you'd need to file your 1040-X by April 15, 2028 (assuming you filed your original return on time). Also, when I submitted my amended return, I included a brief cover letter explaining the situation in simple terms. I can't prove it helped speed things up, but I got my refund in about 16 weeks which seemed faster than what others experienced.
Did you mail your 1040-X or were you able to e-file it? I've heard some people can e-file amended returns now but I'm not sure if that's true for all situations.
I had to mail my 1040-X. While the IRS has been expanding e-filing options for amended returns, it's still limited. If your original return was e-filed through certain tax software, you might be able to e-file the amendment through the same software. But many situations still require paper filing. For my situation (similar to the original poster where I overpaid), I had to mail it in. If you do mail it, use certified mail with return receipt so you have proof of when the IRS received it. This is important for tracking and in case there are any disputes about meeting filing deadlines.
Has anyone ever received their amended return refund via direct deposit? I thought the IRS only sends paper checks for amended return refunds, no matter what you request on the form.
Chris King
Look into whether your Cash App account is personal or business. I accidentally set mine up as a business account years ago and didn't realize it until I got hit with a 1099-K. All my friend payments were being flagged as business income! You can check in your profile settings. If it's set as business, you might want to create a new personal account for your roommate transactions and keep them separate.
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Anthony Young
ā¢Wait how do I even check this? I literally just signed up with my email years ago and never thought about it. Is there a specific setting I need to look for?
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Chris King
ā¢Go to your profile icon, then "Personal" at the bottom. If you see an option that says "Switch to Business" then you're currently on a personal account which is good. If it says something like "Business Settings" or shows a business name, then you have a business account. Cash App also has colors - personal accounts are usually green while business accounts are typically black. Double check this ASAP because it makes a huge difference in how your transactions are reported!
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Rachel Clark
My roommate and I started using Venmo instead of Cash App because we heard they have clearer distinctions between personal and business transactions. Anyone else switch platforms to avoid this issue?
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Zachary Hughes
ā¢All the payment apps have to follow the same IRS rules now. Venmo, PayPal, Cash App - they all report when you hit $600 in goods/services. Switching platforms won't help unless you're making sure to use personal payment options.
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