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Don't forget to adjust your estimated tax payments for this year so you don't get hit with the same penalties again! The IRS expects you to pay either: - 90% of your current year's tax, OR - 100% of last year's tax (110% if your AGI was over $150,000) I learned this the hard way too. Now I use the worksheet on Form 1040-ES every quarter to stay on track. Also consider using the Electronic Federal Tax Payment System (EFTPS) to schedule payments in advance so you don't forget.
Thanks for the reminder! Do you think it's better to slightly overpay each quarter to be safe? And is there any penalty for overpaying?
I do think it's better to slightly overpay - I usually aim for about 5-10% over what I calculate. There's no penalty for overpaying, and you'll just get the excess back as part of your refund when you file. The only "downside" is that you're essentially giving the government an interest-free loan, but for me, the peace of mind is worth it. I've also found it helpful to set aside a consistent percentage of all income rather than trying to calculate exact amounts. For instance, I put away 30% of all payments I receive into a separate savings account designated just for taxes, then make my quarterly payments from there.
Has anyone tried requesting penalty abatement through tax software like TurboTax or H&R Block? I'm in a similar situation and wondering if I need to deal directly with the IRS or if the software can handle it.
Most tax software doesn't handle penalty abatement requests very well. I tried using TurboTax for this last year and ended up having to call the IRS directly anyway. The software is great for filing but not so much for post-filing issues like penalties.
Quick tip - if you're filing past returns, check if you qualify for free file options for those previous years too. I used FreeTaxUSA for some back returns and it was way cheaper than going to a tax preparer. Just make sure you're selecting the correct tax year when you start your return!
Do they have the 2023 forms available still? And would they calculate if that forwarded refund from 2022 applies correctly? Thanks for this suggestion!
Yes, they definitely still have the 2023 forms available! Tax preparation websites typically keep forms for several years back for exactly this kind of situation. As for the forwarded refund from 2022, you'll need to enter that as a payment already made on your 2023 return. Most tax software has a section specifically for "payments and credits from prior years" or something similar. It should then calculate everything correctly, taking that forwarded amount into account when determining if you're owed a refund or still owe additional tax for 2023.
Cant stress this enough - DO NOT try to combine tax years! I made this mistake after missing a filing year and it created such a mess. Each tax year is completely separate in the IRS system. File your 2023 return now, and then do your 2024 taxes normally next year.
Totally agree! I did the same thing years ago and ended up with notices from the IRS for the next two years trying to straighten everything out. Just do each year separately and clearly mark the tax year on each return.
The IRS is absolutely SWAMPED this year. I've been working as a tax preparer for 15 years and this is one of the worst delay seasons I've seen. A few things to know: 1) Name changes are a major trigger for manual review, especially if the SSA records and previous tax filing names don't match perfectly. 2) Large refunds (you mentioned it's substantial) also tend to get additional scrutiny. 3) The "Where's My Refund" tool is notoriously unreliable for complicated situations. It often shows just "received" right up until the day they issue the refund. My professional advice: document every call you make (date, time, agent ID if possible, what they told you). Also, contact your congressional representative's office - they have dedicated staff who can initiate a congressional inquiry with the IRS, which often speeds things up.
Is there any downside to contacting your congressional rep? Like could it trigger an audit or flag your account in some way?
There's absolutely no downside to contacting your congressional representative. It won't trigger an audit or flag your account negatively in any way. Congressional inquiries are a normal process, and IRS has dedicated staff just to handle these inquiries. In fact, it often has the opposite effect - it tends to get your return prioritized because the IRS has mandated response times for congressional inquiries. Many taxpayers don't realize this resource is available, but congressional offices help constituents with federal agency issues all the time. It's literally part of their job, and they're often much more effective than you trying to navigate the system alone.
Has anyone tried using the Taxpayer Advocate Service? My refund was delayed for similar reasons last year and I heard they can help with hardship situations.
This might be a weird question, but does anyone know how to actually calculate the right withholding amount? Like is there a formula? My accountant just says "claim 0 if you want a refund, claim more if you don't" but that seems super simplistic.
It's actually pretty complicated. The 2020 W4 form eliminated allowances entirely. Now it's about additional income, tax credits, and extra withholding. The IRS has a Tax Withholding Estimator tool on their website that walks through your full tax situation and calculates the right W4 settings. I'd start there - it's much better than the "claim 0" oversimplification.
Just want to point out that your tax RETURN is the form you file. Your tax REFUND is the money you get back. Sorry to be that person, but the terminology confusion makes tax discussions so much harder!
Ellie Lopez
Don't forget to check if your state/county offers any small business exemptions. Here in Texas, we have a "Freeport Exemption" and a "De Minimis Exemption" that can reduce or eliminate business personal property tax in certain cases. I didn't know about either one until my third year in business and had been paying unnecessarily. Also, keep REALLY good records of when you buy equipment and how much you paid. I learned this the hard way when I had to estimate values and ended up overpaying. Create a simple spreadsheet now with all your business assets, purchase dates, and costs - you'll thank yourself every year at filing time!
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Marcus Williams
ā¢Is there an easy way to find out about these exemptions? The forms I got don't mention anything about potential exemptions for small businesses.
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Ellie Lopez
ā¢The easiest way is to go directly to your county assessor's website and look for a "Business Personal Property" or "Exemptions" section. They often have PDFs explaining what's available locally. If that doesn't work, try calling your state department of revenue - they usually have the most comprehensive information. Local exemptions aren't always well-advertised, which is unfortunate but common. Sometimes local business development centers or SCORE offices also keep guides about local tax exemptions for small businesses. Worth checking all these sources since exemptions can save you hundreds or even thousands depending on your business assets.
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Chad Winthrope
The most important thing with business personal property tax is being consistent with your reporting. If you say you have a $1000 computer this year, don't forget about it next year! The assessors actually compare year-to-year filings and will flag inconsistencies. I made this mistake and ended up with an audit. Also, don't include consumables like office supplies that get used up within a year. Only report durable goods (furniture, computers, machinery, etc.) that have multi-year lifespans. And if you're working from home, only include the percentage of items used for business - though honestly, for a home office I'd just report 100% business use for dedicated equipment to keep it simple.
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Paige Cantoni
ā¢This is super helpful. Do receipts matter? I have some equipment I bought used from another business where I just got a handwritten receipt. Will the assessor accept that?
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