Oh man I didn't even think about state taxes! Does anyone know if I need to contact my state tax department proactively or wait to see if they send me something?

It depends on your state, but most states automatically receive information from the IRS about adjustments to federal returns. However, you usually need to be proactive and file an amended state return rather than waiting for them to contact you. In most states, you have a certain timeframe (often 60 or 90 days) after finalizing changes with the IRS to submit an amended state return without additional penalties. If you wait for them to notice and contact you, you'll likely end up paying more in interest and possibly penalties too.

Is it better to mail the response or use their online portal if available? I've heard horror stories about mailed documents getting lost.

Do you have to create an account with the IRS to use their free fillable forms for the extension? And is it actually free or do they try to upsell you?

You do need to create an account on the Free File Fillable Forms site, but it's pretty straightforward. It's completely free with no upsells - it's the official IRS program. It's basically just the raw forms without any guidance, so the extension form (4868) is simple enough, but some people find the complete tax forms overwhelming without software guidance. For just the extension though, it's a great free option.

Yeah, filing an extension will definitely delay your refund since the IRS won't process your actual return until you submit it. The extension just gives you more time to file the paperwork, but your refund won't be processed until after you submit your complete return.

That's a really good point about starting mid-year! So should I have more or less withheld since I'm starting in March rather than January? And I like the idea of quarterly check-ins - do you use any particular method to estimate where you stand?

Since you're starting mid-year, you'll have less annual income than your salary rate would suggest for a full year, which could actually result in overwithholding if you don't account for it. However, this might balance out with your husband's income putting your combined total in a higher bracket. For our quarterly check-ins, we use a simple method. We take our year-to-date income from paystubs, multiply our most recent month by however many months are left in the year, add in expected bonuses/commissions, then use a tax calculator to estimate our total tax. Then we compare that to how much tax has been withheld so far plus what will likely be withheld for the remainder of the year. If there's a gap of more than $1,000 in either direction, we adjust our W4s.

The IRS Withholding Estimator is good but I found it super confusing to use. It asks for so much detailed information that I wasn't sure where to find on my paystubs. Does anyone know a simpler alternative?

Does your CPA think it's better to lease these vehicles instead of buying them outright? I've heard leasing changes the tax treatment somehow.

He actually said it depends on your specific situation. Leasing has different tax treatment - you can deduct the actual lease payments rather than using Section 179 or depreciation. This can sometimes be advantageous if you don't have enough income to utilize the full Section 179 deduction in one year. The luxury auto lease rules can make things more complicated though. For expensive vehicles, the IRS requires an "inclusion amount" that effectively reduces your deduction for leased vehicles above certain thresholds. Definitely something to discuss with your own tax professional based on your specific business needs and financial situation.

You're exactly right. Those videos almost always exaggerate the savings. It's a deduction, not a credit. And they never mention self-employment taxes in the calculation either, which can add significant savings for sole proprietors.

Is there a dollar threshold for when something should be depreciated vs just expensed? Like if my desk was only $300, do I still need to depreciate it or can I just deduct it all at once under supplies/furniture?

There's actually a "de minimis safe harbor election" that lets you expense (rather than depreciate) items that cost less than $2,500 per item or invoice. So for your $300 desk, you could absolutely deduct it all at once instead of depreciating it over several years. Many small business owners don't know about this and end up creating unnecessary complexity by depreciating smaller items. For slightly larger purchases, Section 179 expensing is another great option that lets you deduct the full cost of qualifying equipment in the year you put it into service, rather than depreciating it. The limits are quite generous for small businesses (up to $1,160,000 for 2023).

Simplified method is WAY easier but usually results in a smaller deduction in my experience. I tracked both methods for two years and regular method gave me about $1,200 more in deductions. Depends on your situation though.