This is really helpful advice. Do you know if TurboTax can help me calculate how much I should be paying quarterly? Or should I just put aside 30% of everything I make to be safe?

TurboTax can give you estimated quarterly payment vouchers based on your previous year's income, but since your situation has changed, it might not be accurate. For simplicity, I'd recommend setting aside 30% of every payment you receive in a separate savings account dedicated to taxes. Then each quarter, calculate your actual tax obligation more precisely (or use a tax calculator online) and make your payment. Whatever is left in the account after your quarterlies can go toward retirement savings or other goals. This approach gives you a buffer and prevents nasty surprises.

This! I'm in California and they're even stricter about estimated payments than the feds. And their penalties are no joke either.

Are you sure about this? I've read conflicting info online and don't want my payment to get misapplied. Would "Amount Owed on Notice" be more appropriate than "Tax Due on Return" since this is from a notice?

I've paid three different CP notices this way over the years and never had any issues. The key is making sure you enter the correct tax year and form number along with it. However, "Amount Owed on Notice" would also work fine. The most important thing is that you include your SSN, the correct tax year (2018), and the form number referenced on your notice. The payment system will attach the payment to your account regardless of which of these two options you select. The IRS cares more about identifying YOU correctly than the specific reason code you choose from their dropdown.

The IRS generally doesn't report to credit bureaus directly, but tax liens used to show up on credit reports. However, since 2018, the three major credit bureaus no longer include tax liens on credit reports as part of their National Consumer Assistance Plan. That said, you should still address it ASAP. If you can't pay in full, set up a payment plan on the IRS website under "Pay" and then "Payment Plans." This shows good faith and stops most aggressive collection actions.

This is super helpful! I hadn't even thought ahead to resolution options yet. Any tips on documentation needed for the Offer in Compromise? I suspect my client will have significant tax debt once we figure out all the unfiled years.

For the OIC, you'll need comprehensive financial documentation - recent bank statements (3 months), pay stubs, vehicle registrations, property records, investment accounts, retirement accounts, credit card statements, loan statements, and monthly expense documentation. The IRS Form 433-A (individual) or 433-B (business) will be required. The key is accurately documenting your client's collection potential. This includes liquid assets, equity in property, and future income potential minus allowable expenses. If your client has few assets and limited income, that strengthens the OIC position. Make sure to fully document any hardship conditions or special circumstances that would justify accepting less than the full amount owed.

Streamlined procedures only apply to international situations with unreported foreign assets/income. If this is purely domestic, it wouldn't qualify. Regular voluntary disclosure through filing the required back returns is the way to go.

Technically you can file as soon as the season opens IF you have all your documents. But employers aren't required to send W-2s until January 31st. So unless your employer sends them early, you'll need to wait. Don't file without all your documents! I made that mistake once and had to file an amendment, which was a huge pain.

Thanks for clarifying! I'll wait till I have everything then. Don't want to deal with amendments or worse, getting audited for missing information.

I filed early last year too and got my refund in 2 weeks with direct deposit. But I have a super simple return with just one W-2 and standard deduction. I think complexity matters more than when you file.

I've thought about the nonprofit route but honestly it seems overwhelming. Do I need a lawyer to set that up? And would I have to have an actual board of directors with meetings and all that? It's just me running this little gallery out of a converted garage, so it all seems like overkill, but maybe I'm underestimating the benefits?

You don't absolutely need a lawyer, though having one review your paperwork is helpful. There are services that can guide you through the process for much less than attorney fees. And yes, you would need a board of directors - typically minimum 3 people including yourself. They could be friends or family who support your mission. For a small operation like yours, you might consider fiscal sponsorship instead. This is where you operate under an existing nonprofit's umbrella. You'd maintain creative control while they handle the administrative/tax side. Many community arts organizations offer this service for a small percentage fee. This gives you many nonprofit benefits without creating an entire organization structure yourself.

Not a silly question! But unfortunately it's not quite that simple. The IRS looks at the overall pattern and intent, not just whether you charge something nominal. Charging $1 admission that doesn't come close to covering costs might actually reinforce that it's a hobby rather than a genuine profit-seeking business. They look at your overall approach, whether you have business plans, separate accounting, etc. It's more about demonstrating genuine business intent rather than just token income.