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Do I need to report low self employment income from multiple gig jobs?
Hi everyone, I'm trying to figure out my tax situation for next year. In 2024, I've only made about $700 doing Instacart deliveries and roughly $100 from Uber Eats so far. Since both incomes are pretty low, I'm wondering if I'm required to report both of these on my taxes or if I only need to report the Instacart earnings since that's the larger amount? Or maybe I don't need to report either since the total is under $1000? This is my first time doing gig work and I'm confused about the minimum threshold for reporting self-employment income. Any help would be appreciated!
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Capital gains implications on gifted house transfer - selling property not in our name
My wife and I are in a complicated situation with our current home. My father-in-law purchased our house about 15 years ago for $270k, but we've been the ones living in it and making all the payments. We've completely paid off the house over the last several years, but the deed is still under my father-in-law's name. We're now looking to sell this house (current market value around $1.1 million) and purchase a new home. About 90% of the proceeds will go toward our new primary residence. Here's my question: If my father-in-law transfers the deed to me first, and then we sell it and use the money for our new house, will we still have to pay capital gains tax? From what I understand, if we sold it while keeping it in his name and he simply gifted us the money, we might avoid capital gains altogether. However, my father-in-law has been somewhat unreliable with financial matters in the past, and I'm concerned he might not transfer the full amount to us. Having the house in my name before selling would eliminate a lot of anxiety. Any advice on the tax implications and best approach would be greatly appreciated!
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Just wanted to add that timing matters a lot in your situation. If your father-in-law transfers the house to you now, you should wait as long as possible before selling to establish ownership time for the Section 121 exclusion. Also, make sure to document EVERYTHING about the payments you've been making over the years. Bank statements, canceled checks, anything that proves you've been financially responsible for the house. This creates a paper trail showing beneficial ownership that could help if you're ever audited.
Thanks for this advice! How far back should we go with documentation? We have most bank records for the past 7 years, but the earlier years might be harder to track down. Also, does having our names on utility bills help establish our "beneficial ownership" claim?
Try to gather documentation going back as far as possible, but the past 7 years should be sufficient for most IRS purposes since they typically don't look back further than that for audits. If you can show a consistent pattern of payment responsibility, that strengthens your case. Utility bills in your names are excellent supporting evidence! They help establish that you were truly treating the property as your primary residence. Also gather any documentation showing you were responsible for property taxes, insurance, maintenance and repairs. The more comprehensive your paper trail showing you were acting as the true owners, the stronger your position.
Has anyone considered the stepped-up basis option? If the father-in-law is older, it might be worth keeping the house in his name until he passes (sorry to be morbid), at which point the basis would step up to the fair market value at the time of death, eliminating capital gains.
That's technically correct but comes with significant risks in this situation. The OP mentioned trust issues with the father-in-law, so leaving the property in his name creates vulnerability. Also, they need the proceeds now for their new home purchase, so waiting isn't practical.
Filing my taxes on my own for the first time - Is my tax bill correct?
Hey everyone, I'm breaking away from tradition this year and filing my own taxes instead of using my parents' accountant. I decided to try FreeTaxUSA since my tax situation isn't too complicated. After finishing everything, it says I owe $3,241. This doesn't seem way off from last year when I owed about $2,750. I did get a promotion at work this year with a decent raise. Just wanted to double check here if this amount makes sense based on my information. Here's what my W2 shows: box 1: $92,479.65 box 2: $9,184.25 box 3: $98,411.53 box 4: $6,101.52 box 5: $98,411.53 box 6: $1,427.01 I also have: Savings account interest: $8,534.59 12-month CD interest: $5,288.19 Does this tax bill sound right? I'm in Florida if that matters. Thanks for any advice!
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I think your calculations look right based on the numbers. I moved from an accountant to doing my own taxes last year and had a similar "sticker shock" moment. Here's a tip I wish someone had told me: whenever you have income that doesn't have taxes withheld (like your interest), you should plan to set aside about 25-30% of it for taxes, depending on your tax bracket. For next year, look into making quarterly estimated tax payments for that interest income. The IRS form is 1040-ES. It'll save you from having a big bill next April and might even save you from underpayment penalties if your total tax due is high enough.
Thanks for confirming! Quick question - how do the quarterly payments work? Do I just guess how much interest I'll earn for the year and divide by 4? And if I mess up the estimate, will I get penalized?
Quarterly payments are basically your best estimate divided into four payments. The IRS provides a worksheet with Form 1040-ES that helps you calculate the amount. You can base it on last year's interest if you expect similar amounts, or adjust as needed if you know it will be different. If you underestimate, you might face a small penalty, but only on the difference between what you should have paid and what you did pay. The good news is there's a "safe harbor" rule - if you pay at least 90% of this year's taxes or 100% of last year's tax liability through withholding and estimated payments, you generally won't face penalties even if you end up owing more.
One thing to consider - are you contributing to any retirement accounts? With your income level, putting money into a traditional 401k or IRA could reduce your taxable income and potentially lower your tax bill. For 2025, you can contribute up to $23,000 to a 401k if your employer offers one, or up to $7,000 to an IRA. Might be worth looking into for next year's taxes, especially since you have substantial interest income that's adding to your tax burden.
Not OP but I'm in a similar situation. If I max out my 401k at work, does the contribution have to be made before December 31st to count for that tax year? Or do I have until April 15th like with an IRA?
Is my accountant wrong about my tax return calculations?
So I'm really stressed about my taxes this year and I think my accountant might be making a mistake. I've been with the same accountant for about 5 years but this is the first time I'm questioning their work. I switched jobs in November and also had some freelance income on the side. When my accountant sent me the draft return, the numbers just don't add up for me. He's saying I owe an additional $2,800 which seems way too high based on what I've been withholding all year. When I questioned him about it, he just said "trust me, I've been doing this for 20 years" and didn't really explain the calculations. He mentioned something about self-employment taxes on my freelance income, but even accounting for that, the numbers seem off. Has anyone else dealt with questioning their accountant? Should I get a second opinion or am I probably missing something? Tax season is already stressful enough without wondering if the person you're paying is making mistakes.
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Always get a second opinion when in doubt! I had an accountant once who insisted I couldn't take the home office deduction because I also had a full-time job. Turns out he was totally wrong - if you're self-employed even part-time, you can absolutely take that deduction for the portion of your home exclusively used for that business. Found a new accountant and saved over $1,000.
Did you find the new accountant through a referral or did you just search online? I'm thinking I might need to do the same thing but I'm not sure how to find someone reliable.
I got a referral from a coworker who also does freelance work on the side. Personal referrals are definitely the way to go if possible since online reviews for tax professionals can be hard to trust. If you don't have any personal referrals, I'd recommend looking for an Enrolled Agent (EA) rather than just any tax preparer. They're specifically licensed by the IRS and tend to be more knowledgeable about tax code than the seasonal preparers at big chain tax services. Local small business associations sometimes have lists of reputable tax pros who work with self-employed individuals.
Have you checked if your accountant is actually calculating your Qualified Business Income deduction correctly? With your freelance income, you should be eligible for the QBI deduction which is up to 20% of your qualified business income. This is something a lot of tax preparers overlook or calculate incorrectly.
QBI is so confusing! My accountant says I don't qualify because my business is a "specified service business" (I'm a consultant) and my income is too high. Is there a simple way to know if I should be getting this?
CP504 Notice received - should I trust my accountant or pay the IRS immediately?
I'm really freaking out right now and need some advice. My husband and I received a CP504 Notice from the IRS threatening to levy our assets if we don't pay approximately $2,700. The whole situation started because my employer sent an incorrect W2 to our accountant last year. We caught the mistake and forwarded the correct W2 to him immediately. We've been getting notices about owing money for several months now, and each time our accountant tells us not to worry - he says he's calling the IRS regularly and has submitted paperwork to fix this. Now that we've received this CP504 with the levy threat, I called him in a panic, and he seemed almost pleased about it. He said this might actually help because now someone at the IRS might actually pick up when he calls. When I suggested just paying the amount to stop the stress and potential levy, he strongly advised against it. He insisted we shouldn't pay what he calls the "assumed IRS amount" and that he wants us to only pay the "correct amount" once this is resolved. I trust him generally - he's been our accountant for years - but these notices are getting increasingly threatening, and it's causing me serious anxiety. We could easily pay the $2,700 right now to make this go away, but he's adamant we shouldn't. Is it normal for a tax professional to tell you NOT to pay when you're getting levy notices? Should I trust his judgment on this or just pay to avoid a levy?
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Your tax guy is probably right, but there's a middle ground option you might consider. You can set up an installment agreement with a very small monthly payment (like $25) while your tax pro continues to resolve the actual issue. This typically stops collection activities including levies, gives you a formal agreement with the IRS, but doesn't require you to pay the full incorrect amount. If your accountant resolves it in your favor, you can get refunded for whatever small payments you made. I went through almost exactly this same situation when my employer issued a corrected W2 but the IRS assessment was based on the original incorrect one. My accountant was working on it, but I couldn't sleep at night worrying about levies, so the small installment payment was my compromise solution.
That's an interesting approach I hadn't thought of. Wouldn't setting up a payment plan be seen as accepting that I owe the amount though? I'm concerned it might complicate things if we're simultaneously arguing that we don't actually owe this money.
Setting up the installment agreement doesn't mean you're agreeing the amount is correct. The IRS allows you to dispute the underlying tax while still having a payment arrangement in place. You can specifically request that your agreement be processed with "pending audit reconsideration" or "disputed liability" noted on your account. When the dispute is resolved, if it turns out you owe less or nothing, the IRS will refund any excess payments automatically. I made about four $25 payments before my situation was resolved, and I received those payments back with my refund. The peace of mind was worth the temporary $100 out of pocket.
One important thing nobody has mentioned: the CP504 notice isn't the final step before levy! There's still the Final Notice of Intent to Levy (usually Letter 1058 or LT11), which gives you 30 days' notice AND appeal rights before any actual levy happens. The CP504 is definitely designed to scare you, but you still have time and options. Your tax professional is likely aware of this timeline, which might explain why he's not panicking.
This is correct. Having worked at the IRS for 12 years, I can tell you there's a specific sequence of notices, and CP504 is not the final step. You'll get at least one more notice with appeal rights before any levy action.
Skylar Neal
Don't forget about potential deductions to offset that income! You can deduct mileage (58.5 cents per mile for 2024), portion of phone bill, insulated bags, etc. Might reduce your taxable self-employment income significantly.
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Vincent Bimbach
Is it better to track actual expenses or just use the standard mileage deduction? I've been keeping gas receipts but not sure if that's enough.
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Skylar Neal
For most gig drivers, the standard mileage deduction is simpler and often more beneficial than tracking actual expenses. The standard rate (58.5 cents per mile for 2024) is designed to cover gas, maintenance, depreciation, and insurance, so you don't need to keep all those individual receipts. If you choose actual expenses, you need to track EVERYTHING - gas, oil changes, repairs, car washes, depreciation, insurance, etc., and then figure out the business percentage of use. You also need to keep meticulous records. For most people doing Instacart or Uber Eats part-time, the standard mileage rate is the way to go. Just make sure you keep a detailed mileage log with dates, starting/ending locations, miles driven, and business purpose.
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Kelsey Chin
be careful!! I didnt report like $900 from doordash last year because i thought it was under some limit and the irs sent me a letter about unreported income 😩 they know everything you make because these companies report it all to them. just report everything and save yourself the headache!!
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Norah Quay
Same thing happened to my boyfriend! Door dash sent him a 1099 even though he only made like $600, and he ignored it. Got a scary letter from the IRS six months later and ended up owing the original tax plus penalties. Not worth the stress.
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