So with the new W-4, should I be completing all the steps or can I just do Step 1 (personal info) and Step 5 (signature) if I want the standard withholding? I heard someone say that's what you do if you want the most tax taken out.

If you just complete Steps 1 and 5, you'll get the standard withholding which assumes you're single with one job and no dependents or other adjustments. This might result in roughly accurate withholding if that matches your situation, but it's not necessarily going to withhold the maximum amount. If you want to ensure you don't owe money at tax time, you have better options than skipping steps. The best approach is to actually complete Step 2 if you have multiple jobs or a working spouse, and Step 4(c) where you can enter an additional amount to withhold from each paycheck. Even putting an extra $20-50 per paycheck in 4(c) can help prevent owing at tax time if you're concerned.

I used it last year and it was pretty helpful. It asks a bunch of detailed questions and then gives you exact instructions for filling out your W-4. The key is being honest and thorough with the information you provide.

Can you still use Section 179 if your business expenses exceed your income though? I thought there were restrictions on that.

Section 179 deductions are limited to your net business income, so technically you can't use it to create or increase a business loss. However, any disallowed Section 179 deduction can be carried forward to future tax years when your business is more profitable. In this case, with expenses exceeding income, regular depreciation might be the better option initially. You'd still get to deduct a portion of the cost each year, and you wouldn't lose any deduction potential. As your tutoring business grows and becomes more profitable, you could potentially use Section 179 for future equipment purchases.

Your accountant is being overly cautious. You absolutely can deduct mixed-use equipment - you just need a reasonable basis for allocation. A detailed log is one way, but not the only way. You could also allocate based on income percentages or make a reasonable estimate of time spent. The key is having some logical method if you're ever questioned.

Thanks for the advice! I do have texts with my uncle confirming he had all three W-2s bundled together when he dropped them off. I wasn't sure if that would help since it wasn't direct communication with the tax preparer. Did you have to be super pushy with H&R Block to get them to cover the penalties?

Those text messages are a good start! You want to establish a paper trail showing you had the intention of filing completely and accurately. No, I didn't have to be super pushy with H&R Block, but I did need to be persistent and speak with a manager rather than just the first person who answered the phone. I made sure to remain calm but firm that this was their error, not mine. I brought copies of all my documentation to the meeting. Most importantly, I referenced their "Maximum Refund Guarantee" and "Accuracy Guarantee" specifically, which most of these big companies advertise. Ask Jackson Hewitt about their specific guarantees and policies for preparer errors - they should have something similar.

Is there a specific format or language we should use for this letter? I'm in a similar situation and don't want to say something wrong that could make things worse.

I worked with Johnson Tax Law in Chicago and had a really good experience. They specialize in tax resolution and don't make unrealistic promises like some of the big advertised firms. They were upfront about costs and what could realistically be achieved.

That's a great point about the collection statute. Some of this debt is from 2018-2019, so not quite close to the 10-year mark yet. And thank you for the reminder about capital gains - I hadn't even thought about how liquidating stocks would affect this year's taxes. Definitely need to be strategic about that.

That's a great point that I hadn't even thought about! Did you find that the insurance increase was significant? And did you end up getting permits retroactively or did you have to make modifications to the structure?

My insurance went up about $240 annually, which wasn't too bad considering I had about $8,000 worth of equipment in there. The bigger surprise was that my property assessment increased after the county assessor noticed the new structure, which raised my property taxes by about $350/year. For the permits, I had to apply retroactively and pay a penalty fee (about $150 extra). I also had to make some modifications - mainly adding a specific type of smoke detector and upgrading the electrical work to meet code. The good news is that all of these costs were partially deductible for my business since I use the space 70% for business purposes.

Your CPA might be thinking about Section 179 expensing instead of regular depreciation. With Section 179, you might be able to deduct the full cost in the year you place it in service rather than depreciating over many years. There are limits though.