Thank you for bringing this up! I didn't even think about quarterly payments. How do I figure out how much to pay each quarter? Can I just divide my expected tax by 4? And do I need to make quarterly payments for both the income tax AND the self-employment tax portion?

You can use Form 1040-ES to calculate your estimated tax payments. It's not always as simple as dividing by 4, especially if your income isn't steady throughout the year, but that's a reasonable starting point if your freelance income is fairly consistent. Yes, your quarterly payments should cover both the income tax and self-employment tax. The IRS doesn't distinguish between them for estimated payments - they just want the total tax paid throughout the year. Another option is to increase your W-2 withholding by submitting a new W-4 to your employer, which can sometimes be easier than managing separate quarterly payments.

This is great advice. I've been freelancing for years and I automatically transfer 30% of every payment I receive into a separate "tax savings" account. It's actually been more than I needed most years, which means I get a little bonus after filing!

Thanks for the tip! I'm definitely going to start doing this. I have a few more freelance projects lined up and I hadn't been setting anything aside. Is that 25-30% a good rule of thumb even for smaller amounts like mine? I'm worried since my regular job already puts me in a higher tax bracket.

I used IRS Free File with FreeTaxUSA last year with both W-2 and 1099 income. It worked pretty well and handled my Schedule C without issues. The federal filing was completely free, and I only paid like $15 for state filing. Way cheaper than TurboTax which wanted to charge me $120+ for self-employment income.

Oh no, I definitely haven't made any quarterly payments. I had no idea I needed to do that. How bad are these penalties usually? Is there any way to avoid them at this point?

Unfortunately, there's no way to completely avoid the penalties now for 2023 since those quarterly payments should have been made throughout last year (typically due in April, June, September, and January). The penalty is basically interest on the amount you should have paid. For perspective, the penalty rate is currently around 8% annually, so if you should have been paying roughly $3,000 each quarter ($12,000 total for the year), the penalty might be around $500-800 depending on how late each payment was. Not catastrophic, but definitely an unnecessary expense.

Do they keep returns forever? I used TurboTax back in 2021 but I can't remember my login info. Is there another way to get copies of old returns?

Most tax software companies keep your returns accessible for about 7 years, though policies vary. If you can't remember your login info, you can usually recover your account through email verification or by contacting customer support. If that doesn't work, you can always request a transcript directly from the IRS through their website. Go to IRS.gov and search for "Get Transcript Online" - this will show you the information from your filed returns, though the format is different from the actual 1040 form.

This is super helpful! Do you know what line number shows total income before adjustments? My scholarship application is asking for that specifically.

Yes! This happened to me with a retirement distribution. Had to submit the same explanation and documents twice. Second time I included copies of their own acceptance letter from the first time. Ridiculous waste of everyone's time.

That's so frustrating! I think I'll do what you did and include their previous acceptance letter. I saved everything from last time thankfully. Wonder if this is happening a lot because of their backlog - like the left hand doesn't know what the right is doing. At least I know what documents to send now.

This is really encouraging, thank you! I did include copies of both W-2s and the corrected one with my response. I didn't think to get a letter from my employer though - that's a great idea. I'll reach out to our HR department tomorrow and see if they can provide something on company letterhead explaining the payroll switch. I've been checking my online account but so far no updates. Sounds like I just need to be patient and wait out the 4+ months. Stressful, but at least I know I've done everything right.

Do you need to track every single trip? Like what if I sometimes stop at the office supply store on my way home from something else? That seems like a lot of record keeping.

You should track every business trip to maximize your deduction and protect yourself in case of an audit. For mixed-purpose trips like stopping at an office supply store on your way home, you can deduct the extra mileage if the stop was necessary for business. Apps like MileIQ or Everlance make tracking much easier - they run in the background on your phone and let you swipe trips as business or personal. The few seconds it takes to log each trip can save you hundreds or thousands in deductions. I learned this the hard way after missing out on substantial deductions my first year because my records weren't detailed enough.

I've used it for about 2 years for my consulting business. The automatic transaction categorization and receipt scanning saves me tons of time. The mileage tracker alone is worth it. And it makes tax time way less stressful - it generates reports for Schedule C that you can just hand to your accountant or transfer to TurboTax. Definitely worth the cost for the headaches it prevents.