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The IRS EITC Assistant is actually pretty good if you input everything correctly. Make sure you're counting all sources of earned income (W-2 jobs plus net self-employment) but separating out any unearned income like investments or unemployment. Don't get tripped up by the investment income limit question - that's asking about interests, dividends, and capital gains, not your 401k or IRA.
Is anyone else having issues with the EITC assistant tool crashing? I tried using it on Chrome and Firefox and it keeps freezing up when I get to the income section. Not sure if it's just me or if the IRS website is having problems.
From personal experience, here's a quick breakdown of costs to help your decision: - Bookkeepers: $30-75/hr or $200-500/mo for small biz - Tax preparers (not CPAs): $150-400 for business returns - Enrolled Agents: $200-700 for business returns depending on complexity - CPAs: $500-2,500+ for business returns, often $150-350/hr for consulting For your situation with multi-state issues and equipment purchases, an EA might be the sweet spot between expertise and cost unless you need financial advising beyond taxes.
Thanks for the cost breakdown! That's super helpful. Do most of these professionals offer free consultations? I'd like to chat with a few before deciding.
Most reputable tax professionals do offer free initial consultations, usually lasting 15-30 minutes. This gives you a chance to explain your situation and see if they're a good fit, while they can give you a more accurate price estimate based on your specific needs. When you schedule these consultations, come prepared with a list of questions about their experience with multi-state taxation and small business equipment deductions. Also ask about their communication style and availability throughout the year - you want someone who's accessible for questions, not just at tax time. The right professional should feel like a partner in your business, not just a once-a-year service.
One thing nobody mentioned - if ur main issue is just organizing receipts and tracking expenses day to day, you might not need a professional yet! I use QuickBooks Self-Employed ($15/month) to track everything, categorize expenses, and log miles. Then I send the organized info to my tax guy once a year. Saved me a ton vs hiring a bookkeeper.
I'm a tax preparer (not an accountant, just do this seasonally) and I see this ALL THE TIME with people who switch from self-prepared returns to professional preparation. The estimated tax penalty (Form 2210) is one of those things that many tax software packages don't handle well for average users. The way it works: if you owe more than $1,000 when you file AND didn't pay at least 90% of your tax during the year (or 100% of last year's tax if that's higher), you're supposed to pay a penalty. Most software will calculate this if the numbers are obvious, but many people don't enter their payment information correctly or the software doesn't prompt properly. If the IRS never caught it, you got lucky! But your accountant is correct to include it. They're not making you pay "more than you have to" - they're making you pay what the tax code actually requires.
Thanks for explaining this! Do you think I should go back and amend my previous returns to add this penalty, or just start including it going forward now that I know?
I generally wouldn't recommend amending prior returns just to add an estimated tax penalty if the IRS hasn't noticed it. The statute of limitations for most issues is 3 years from filing, so older returns are likely closed anyway. Going forward, your best approach would be working with your accountant to either increase your withholding at your job (if you have W-2 income) or make quarterly estimated payments if you have significant 1099 income. Proper planning eliminates the penalty entirely, which is better than calculating it correctly! The penalty is meant to incentivize paying throughout the year rather than all at filing time.
My experience is that different tax software handles Line 38 very differently. After using FreeTaxUSA for years, I switched to TaxAct and suddenly had an estimated tax penalty where FreeTaxUSA never showed one. Then switched to an accountant who calculated it yet another way. The trick is Form 2210 which calculates the penalty has different methods that can be used. Some software automatically uses the "short method" which might not apply the penalty in certain cases, while accountants often use the regular method which is more accurate but can result in higher penalties.
My in-laws INSISTED for years that getting a tax refund was "giving the government an interest-free loan" and I should adjust my withholding to get $0 refund. When I finally did that last year, I ended up owing $780 which triggered an underpayment penalty! Apparently you need to pay at least 90% of your tax liability during the year or 100% of last year's tax (whichever is smaller). Nobody ever talks about the safe harbor rules when giving that advice about refunds!!
This is a great point! I've always found the "don't give the government an interest-free loan" advice to be overblown. With today's savings account rates, the interest you'd earn on that money throughout the year is minimal compared to the stress of potentially owing at tax time. For most W-2 workers, a small refund is actually good peace of mind.
Exactly! I calculated it out and even with a $2,400 refund (which is what I typically get), at 4% interest I'm only "losing" about $50-60 over the course of a year. That's well worth the peace of mind of not having to worry about owing money. Plus, I've gotten much better at immediately putting my refund into my Roth IRA each year so it starts working for me right away rather than getting spent.
One huge misconception I see: people thinking getting married will automatically save them on taxes. The "marriage penalty" still exists for some high-income couples, especially if both earn similar amounts. I've seen colleagues rush to get married in December "for tax purposes" without understanding they might actually pay more! Your video should definitely cover marriage tax implications.
Anastasia Kuznetsov
I had a similar issue and found out it was because I had moved during that time period and the IRS was sending notices to my old address. Once I updated my address with them, I received letters about minor adjustments they'd made to my returns from those years. Check if you've moved or changed contact info!
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Eduardo Silva
ā¢I haven't moved in the last 5 years, so that's not the issue in my case. Did they eventually update the status in your online account, or did it stay as "received but not approved" even after resolving whatever issues they found?
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Anastasia Kuznetsov
ā¢My online account actually never updated to show "approved" even after everything was resolved. The IRS rep I eventually spoke with said their online system often doesn't update that status field properly, especially for returns where you owe instead of getting a refund. They focus their system updates on refund cases. What ultimately mattered was that I had confirmation from the IRS that everything was processed completely. If you haven't received any notices requesting additional information or payment, you're probably fine despite what the online status shows.
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Sean Fitzgerald
Does anyone know if this affects your ability to get loans? I'm trying to buy a house and the mortgage company is asking for tax transcripts. Will this "received but not approved" status cause problems with that?
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Leila Haddad
ā¢You should be fine for mortgage purposes. What lenders care about is the tax transcript itself, not the status shown in your online account. You can request your tax transcripts directly through the IRS website or through your lender, and these will show your income history accurately even if your online account shows "received but not approved.
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