That's a great idea! I hadn't even thought about retirement accounts. Would we need to wait until after we file taxes to open the Roth IRA, or can we do it now based on the 1099 amount?

You can open and fund the Roth IRA anytime between January 1, 2025 and the tax filing deadline (usually April 15, 2026) for the 2025 tax year. You don't need to wait until after filing taxes. Remember that the contribution limit is based on earned income after business expenses. So if your teen's net self-employment income ends up being $550 after deducting the computer and software expenses, their maximum Roth contribution would be $550 for the year, not the full $1,400 from the 1099-NEC.

I think there's a safe harbor exception for dependents with small amounts of income? My accountant told me my daughter didn't need to worry about quarterly payments for her babysitting income until it was more substantial.

Do I still qualify for child tax credits if my income was around $80k total (including the contractor work)? I thought there were phaseouts.

Yes, you should still qualify. The Child Tax Credit begins to phase out at $200,000 for single filers and $400,000 for married filing jointly. With your total income around $80k, you're well below those thresholds, so you should be eligible for the full amount for each qualifying child. The Earned Income Credit has lower income limits, so you'd need to check those specifically based on your filing status and number of qualifying children. But the Child Tax Credit should definitely be available to you based on the income information you've shared.

What app do you use for mileage? I've been trying to keep track on a notepad but I always forget.

I use MileIQ and it's been a lifesaver. It automatically tracks all your drives and then you just swipe right for business or left for personal. Super easy and creates IRS-ready reports. Some people also like Everlance or Stride. Another tip: set calendar reminders for quarterly tax payments (April 15, June 15, September 15, and January 15). The IRS doesn't send reminders and it's easy to forget, especially that weird June one that's only two months after April!

Would I have to pay taxes on the conversion from after-tax to Roth though? I'm confused about how this is different from just doing a backdoor Roth IRA.

You only pay taxes on the growth between the time you make the after-tax contribution and when you convert it to Roth. If you convert frequently (some plans even allow automatic conversions), this tax amount is minimal. The main difference from a backdoor Roth IRA is the amount you can contribute. A backdoor Roth IRA is limited to $7,000 per year (2025 limit for those under 50). With the mega backdoor Roth, you could potentially contribute up to around $43,500 more (the exact amount depends on your plan and the total annual 401k limit of $70,000 for 2025 minus your regular contributions and employer match).

Great point about the flexibility! But don't you lose a lot to taxes on dividends and capital gains compared to Roth growth that's completely tax-free?

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.

Thanks for the recommendation! I've heard good things about TaxAct from a coworker too. Did you find their interface easy to use? I'm not super tax-savvy and need something that explains things clearly.

Their interface is pretty straightforward and they explain tax concepts in plain English. They use a question-based approach that helps catch things like HSA contributions without you needing to know which specific forms are required. The help sections are quite clear with examples, and if you get stuck, they have decent customer support through chat. For someone who isn't tax-savvy, they offer good guidance without overwhelming you with jargon. Their review system also catches common errors before you file.

FreeTaxUSA is such an underrated option. Been using them for 4 years now and they handle everything correctly including my rental property and side business. None of the upselling garbage that TurboTax does either.