I think my income might be too high for EIC since I made about $43k at my regular job plus around $12k from deliveries. But TurboTax did guide me through a bunch of expense questions like my phone, insulated bags, and even a portion of my car insurance. I hadn't thought about tracking those things during the year but was able to go back and estimate pretty closely.

Your combined income of $55k might still qualify you for some EIC depending on your filing status. For 2022, the income limit for a single parent with one child was around $43k, but for married filing jointly it was higher. Even if you don't qualify for EIC, those business expense deductions you entered likely made a huge difference! Remember that your taxable income from the delivery work is your gross earnings minus all those business expenses. So if you made $12k but had $5k in legitimate business expenses (including that substantial mileage deduction), you're only paying taxes on $7k of additional income. If you had excess withholding from your W-2 job, that could easily result in a refund.

This is really important! I made the same mistake. Got a refund my first year doing DoorDash because my W-2 job withholding covered everything. Next year I had a $3200 tax bill that completely blindsided me. I use the IRS estimated tax payment system now (Form 1040-ES) and make quarterly payments so I don't get hit with penalties or a huge bill at tax time.

Does the first-time penalty abatement really work? I've heard about it but wasn't sure if it was just a tax myth.

Yes, the first-time penalty abatement absolutely works! It's an official IRS program, not a myth. I successfully got about $430 in penalties waived after I paid late two years ago. The key requirements are: - You've filed all required returns or filed extensions - You have no outstanding tax debts - You haven't had significant penalties in the past 3 tax years The IRS doesn't advertise it much, but when you call and specifically ask for "first-time penalty abatement" they know exactly what you're talking about. Just be polite and explain that your late payment was a one-time issue.

Totally agree. I was late by 3 weeks last year on about $4000 and the penalty+interest came to like $45 total. The peace of mind knowing you're handling it properly is worth way more than the few dollars in penalties.

Thanks for the reassurance! I was definitely stressing more than necessary. I went ahead and paid the $4,500 today and will pay the rest next week as soon as my check clears. Based on everyone's comments, it sounds like I'll owe maybe $40 in penalties/interest which isn't nearly as bad as I feared.

Thanks for this explanation! I definitely have an outdated understanding of how withholding works now. I don't have any side income, but I did receive a small bonus this year that was probably underwitheld like you mentioned. So to fix this for next year, should I just submit a new W4 with some additional withholding amount in section 4(c)? How do I figure out how much extra to withhold?

Yes, submitting a new W4 with an additional amount in section 4(c) is exactly what you should do. To calculate the amount, take the tax you owed this year, divide by the number of pay periods remaining in the year, and enter that amount. For example, if you owed $1200 and get paid twice a month, you'd enter $50 per paycheck ($1200 ÷ 24). For a more precise calculation, use the IRS Tax Withholding Estimator on their website. It'll walk you through your specific situation and recommend the exact amount to put in section 4(c). Just make sure you have your most recent paystub and tax return handy when you use it.

YES! My company's HR actually sent out an email telling everyone to "update your allowances to 0 or 1" last month. I had to awkwardly explain to them that allowances haven't been a thing since 2019. They seemed genuinely surprised.

The Taxpayer Advocate Service sounds interesting - do you know how long it typically takes to get help from them? And would they be able to help with e-filing specifically or just general tax issues?

The Taxpayer Advocate Service typically takes 2-4 weeks to get assigned to your case, but they're absolutely able to help with e-filing issues, especially when there are technical barriers preventing you from filing correctly. They're particularly helpful in situations like yours where you're actively trying to comply with tax obligations but facing system limitations. For faster assistance, I'd recommend trying the solutions others mentioned first (different software or calling the IRS directly). The Taxpayer Advocate is great as a backup option if those routes don't work out. They can sometimes expedite processing of paper-filed amended returns in cases where e-filing isn't possible.

This is the correct answer! The IRS systems require a value for prior year AGI even if you didn't file. Using $0 is the standard workaround.

Would we calculate those quarterly payments just based on our investment income or would we need to factor in possible underwithholding from our regular jobs too? And is there some calculator to figure out how much to send each quarter?

You'd want to account for both the investment income and any potential underwithholding from your jobs. The simplest approach is to take what you owed this year (your $4,300) and divide by 4 - that would be roughly $1,075 per quarter. That's assuming your income situation stays similar. There's actually a worksheet in the Form 1040-ES instructions that helps you calculate exactly what you should pay. Alternatively, if you pay at least 100% of last year's tax liability (or 110% if your AGI is over $150,000), you're generally safe from underpayment penalties even if you end up owing more when you file.

This is such a good point! My company withholds exactly 22% from bonuses regardless of my W-4 settings, and it's never enough. I always have to request additional withholding when I get my annual bonus.