Thank you for bringing this up! I actually do have student loans, so that's really helpful to know. Do you know roughly what income level the student loan interest deduction starts to phase out? And would HSA contributions have the same effect of lowering my AGI?

The student loan interest deduction starts phasing out at $75,000 for single filers and $155,000 for married filing jointly in 2024. Since you mentioned making $72,000, you're right at the edge where increasing retirement contributions could make a big difference. And yes, HSA contributions absolutely lower your AGI in the same way 401k contributions do! Both HSA and traditional 401k contributions are pre-tax and reduce your adjusted gross income. This can help you qualify for credits and deductions that have income limitations. In your case, both strategies would work together to potentially keep you fully eligible for the student loan interest deduction.

Generally: HSA first if you have matching funds for it (rare), then 401k up to employer match, then max HSA, then back to 401k. HSA has better tax advantages than 401k since withdrawals for medical expenses are tax-free (401k withdrawals are always taxed as income).

Did your sister mention anything about whether this affects how quickly we'll get our refunds once Feb 15th hits? Like if we're already in the system, do we get processed faster?

My sister says early filers definitely get processed faster once the Feb 15th date passes. The IRS essentially creates a queue of all the PATH Act returns (ones with EIC/CTC), and they process them in roughly the order received once that date hits. So being already in the system and "accepted" means you're at the front of that line. She also mentioned that most people with straightforward returns who file electronically and choose direct deposit usually see their refunds within 7-10 days after Feb 15th if they filed in January. So you could potentially see your money by Feb 22-25th.

That's totally normal this time of year. Mine was accepted on 1/15 and shows the same thing. It won't update to "Refund Approved" until after they can actually process the EIC/CTC returns after Feb 15th. It's frustrating, but at least we know they have it!

Can you deduct a home office if you're only doing this 1099 work part time? I use my spare bedroom for my freelance design work but it's not my main job.

Yes, you can still claim a home office deduction for part-time self-employment work. The key requirement is that the space must be used "regularly and exclusively" for your business activities. If your spare bedroom is used solely for your freelance design work and not for other purposes, you can deduct it. You have two options: the simplified method (currently $5 per square foot up to 300 sq ft) or the regular method where you calculate the actual expenses based on the percentage of your home used for business.

Would that be better than just using a Roth IRA? I thought those had better long-term tax benefits.

Yes! I've been self-employed for years. The basic rule is if you expect to owe $1,000+ in taxes, you should make quarterly payments. Use Form 1040-ES to calculate. The easiest method is to take your total expected tax for the year, divide by 4, and pay each quarter. Due dates are April 15, June 15, Sept 15, and Jan 15 of the following year. I personally set aside 30% of all my freelance income in a separate savings account to cover both income tax and self-employment tax (15.3% for Social Security/Medicare). That way I'm never caught short when payments are due!

Thanks so much! I didn't realize the cutoff was only $1,000 - I'll definitely hit that. Is there a penalty if I miss the first quarter payment but make the rest on time? I'm just learning about all this now. I love the idea of setting aside 30% in a separate account - that makes so much sense. Will definitely be doing that going forward. Do you use any specific software or just calculate it manually with the 1040-ES?

Extensions only give you more time to FILE, not more time to PAY. So you still need to estimate and pay what you think you'll owe by the regular April deadline, or you'll face penalties and interest. I file extensions most years because I have some investments that don't get their paperwork out until late March, and it's super easy. Just file Form 4868 - can do it online through IRS Free File or most tax software. It gives you until October 15 to file the actual return.

Thanks for the mileage tip! Does that work if I'm driving to these coffee shops where I do my contract work? Also, I'm on my parents' health insurance still (I'm 24) - does that disqualify me from any health insurance deductions?

Driving to coffee shops can be deductible if they're not considered your principal place of business. If you primarily work from your home office and occasionally go to coffee shops for a change of scene or specific tasks, those trips might qualify as business travel. Keep a detailed log of these trips including date, starting point, destination, purpose, and miles driven. Regarding health insurance, since you're covered under your parents' plan and not paying the premiums yourself, you wouldn't be eligible for the self-employed health insurance deduction. That deduction is specifically for self-employed individuals who pay for their own health insurance policies.

This is such a weird and unhelpful comment. OP asked specifically about deductions, not business growth advice. Why not just answer the question that was asked instead of changing the subject?