Does the safe harbor rule apply even if you had zero tax liability the previous year? I was a student last year with almost no income.

Yes, the safe harbor rule still applies if you had zero tax liability the previous year. In fact, that's the best case scenario! If you had no tax liability last year, then 100% of your previous year's tax is zero, which means you technically don't need to make estimated payments this year to meet the safe harbor provision. However, this only protects you from underpayment penalties - you'll still owe the full tax amount when you file. So it's usually better to make the quarterly payments anyway to avoid a big tax bill all at once. This zero-liability exception only works for one year, so plan accordingly for next year's payments.

Yes, payment processors like PayPal, Stripe, and Venmo are required to report to the IRS if you receive more than $600 in payments for goods and services in a year. They'll send you a 1099-K form that you'll need to include when filing your taxes.

Do you have any issues with more complex returns in TaxAct Pro? I've got mostly simple returns but a couple clients with rental properties and small businesses. Can it handle K-1 forms?

I haven't run into any significant limitations with more complex returns. It handles Schedule E for rental properties very well, and I have several clients with small businesses filing Schedule C without issues. For K-1 forms, it processes them fine - I have a few clients with partnership and S-corp income. The only area where I've found it slightly less robust is with very complex investment situations or extremely complicated business returns with lots of unusual deductions. But for the typical small business owner, rental property investor, or individual with some investment income, it works perfectly well. The value for the price is excellent for a small practice.

FreeTaxUSA doesn't have a professional version that allows you to prepare multiple client returns under a practitioner account. It's really designed for individuals doing their own taxes, not professionals preparing returns for clients. You'd need software specifically designed for tax professionals that includes features like client management, e-filing capabilities under your EFIN, and professional liability protections.

Thanks for clearing that up! I was hoping there might be a free option, but I understand professional software would need those additional features. Guess I'll need to budget for one of the lower-cost options mentioned here.

Do you ever find yourself overpaying with this method? I'm worried about giving the IRS an interest-free loan if I calculate too conservatively.

I do sometimes end up overpaying slightly, but I personally prefer that to underpaying and facing penalties. In years when I've overpaid, I just apply the refund to next year's estimated payments. If you're concerned about overpaying, you might want to be more precise in your calculations. I typically use a rough estimate of my marginal rate plus state taxes (about 35% in my case), but you could use tax software to run a more accurate projection after each significant trade to get closer to the exact amount.

The quarterly tax system is technically "pay as you go," so each payment should reflect your income for that quarter. If you have minimal gains in early quarters and then a big gain later, you would make a larger payment for the quarter when you had the gain. You don't need to retroactively adjust earlier quarters.

I tried setting up an IRS online account but got stuck at the ID verification part. It kept rejecting my driver's license photo. Any tips on getting past that?

I had the same issue with the ID verification initially. Make sure you're taking the photo in good lighting with no glare on your ID. Also, they're really strict about the photo quality - I had to use a different device with a better camera. If that still doesn't work, they offer an alternative verification process through ID.me that some people find easier. You can also request a mail verification code if the digital methods aren't working. It takes longer but it's more reliable if you're having technical issues with the photo verification.

This is a really important point. How do you know if you need to make estimated payments for next year? Is there some threshold?

The married filing separately thing is interesting! I've rarely seen cases where it's beneficial. But what about separated couples who aren't legally divorced yet? Would you have some exception for them?

Good point about separated couples! I'd create a simple "legally separated" status that would essentially treat them as single filers. The current system with MFS is just too punitive with all its limitations and phase-outs. The problem is that MFS was designed to prevent gaming the system, but it's become so restrictive that it actually creates unfair outcomes for people in difficult situations, like those separating or dealing with a spouse who won't cooperate on taxes. A better-designed single status for separated individuals would be much more straightforward.

Average cost basis would be amazing! Also why are crypto transactions so complicated tax-wise? I bought and sold some Bitcoin last year and the tax calculations were insane. Each transaction created a taxable event and I had hundreds.