Are there certain expenses that are particularly valuable to track for a relatively small side business? I'm doing mostly digital work from home, so I don't have a lot of obvious business expenses.

For digital work from home, there are several valuable deductions people often miss. Track your internet bill (you can usually deduct a percentage based on business use), any software subscriptions you use for work, your cell phone bill (again, the business percentage), and home office deductions if you have a dedicated workspace. Also don't forget about equipment - even if you're using your existing computer, you might be able to deduct a portion of its value through depreciation. Office supplies, professional development courses, and even some of your utilities can be deductible. Even small expenses add up when you're only making $3-4K from side work.

Totally agree! I started a side gig when my second baby was 2 months old. The flexibility was actually great with a newborn - I could work during naps or when my partner was on baby duty. And the extra money came in handy for all the surprise expenses babies bring!

Wait I thought the marriage penalty was eliminated with the Tax Cuts and Jobs Act? I've been telling all my friends who are getting married not to worry about it.

The Tax Cuts and Jobs Act reduced the marriage penalty for many taxpayers, but it didn't eliminate it completely. It's true that for many tax brackets, the MFJ threshold is now exactly double the single threshold, which helps. However, the marriage penalty still exists in several areas: the highest tax brackets still don't have exactly doubled thresholds, and many credits and deductions have phase-out ranges that aren't doubled for married couples. Examples include the student loan interest deduction, capital loss deductions, and certain credits that phase out based on AGI. Also, SALT deductions and AMT can still create marriage penalties for some taxpayers. So while it's less common now, couples with similar higher incomes, like the OP with $135k combined, can still experience some marriage penalty effects, especially if they have other specific deductions that phase out.

Oh that's a good point! I'm going to check our last few pay stubs from 2022 to see if the withholding actually changed after we submitted the new W-4s. And yes, I did have about $3,000 in freelance income that didn't have any withholding. I completely forgot about that! That might explain part of why we're owing.

Does it help to send it via Priority Mail or does regular certified mail work fine? Also wondering if I should call the IRS first to verify the correct mailing address for 941-X forms?

Regular certified mail with return receipt is perfectly fine. The key is having that tracking number and delivery confirmation, not the speed of delivery. I wouldn't bother calling the IRS just to verify the address - those addresses are listed in the 941-X instructions and rarely change. Plus, getting through to someone just to ask about an address will be a huge waste of time. Just double-check the address in the most current version of the instructions (available on irs.gov) and you'll be good to go.

No, you don't need to issue corrected W-2s for ERTC claims. The ERTC doesn't change the wages you paid your employees or what was reported on their W-2s. The credit is based on qualified wages, but claiming it doesn't retroactively reduce the actual wages paid to employees. It's a credit for the employer only. The employees' taxable income and withholding amounts remain the same, so the original W-2s remain correct.

Thank you for bringing this up. I'm worried about rocking the boat too much since I need this job right now. Is there a way to file these forms without my employer knowing it was me specifically? Or would they immediately know who reported them?

Unfortunately, the SS-8 process isn't anonymous. When you file Form SS-8, the IRS will contact your employer for their side of the story, so they'll know you initiated the process. Some people wait until they've found a new job before filing. If you're concerned about immediate retaliation but still want to address the issue, you could try having an honest conversation with your employer first. Sometimes misclassification happens due to ignorance rather than malice. You could share information about proper classification guidelines and express your concerns about the self-employment tax burden. Document this conversation in case you need it later as evidence of when you raised the issue.

I've been using H&R Block for years and they have something similar. The questions are pretty straightforward and it becomes really obvious when someone should be an employee vs contractor. With fixed hours, company equipment, and direct supervision, it's clear-cut employee territory.

Can I really qualify for EITC in years when I can't claim my daughter as a dependent? I thought those were directly connected. My income is around $52,000 if that matters.

With an income of $52,000, you wouldn't qualify for EITC without a qualifying child. For 2025, the income limit for EITC without children is much lower (around $17,000 for single filers). Contributing to retirement accounts is still your best bet. If you can max out a traditional 401k ($23,000 in 2025) or contribute to a traditional IRA ($7,000 in 2025), those contributions directly reduce your taxable income. Even putting in a few thousand dollars would substantially decrease your tax bill. Also, if your employer offers any pre-tax benefits like health insurance, FSA, or HSA contributions, those can further reduce your taxable income.

This is actually really smart advice. I do the same thing - have a different W-4 for years when I claim my kid vs when I don't. Saves me from owing a big amount in my "off" years.