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PRO TIP: Take photos of your W-2 as soon as you get it! I lost mine last year and had to request a replacement which delayed my filing by 3 weeks. Most employers can reissue them but it's a hassle and takes time. Also, check if your employer offers electronic W-2s through their payroll system (like ADP or Workday). I switched to electronic delivery and now I get mine as soon as they're ready instead of waiting for the mail.
Does the electronic version work the same for filing? My tax guy always wants the "official" form and I'm worried the electronic one won't count.
The electronic version is exactly the same as the paper one for tax filing purposes - it contains all the same information and is considered an "official" form by the IRS. Your tax preparer can use it just like the paper version. I actually find the electronic ones better because there's no risk of faded print that scanners can't read properly. Plus you can download it as a PDF and keep it stored safely without worrying about losing the physical copy. Just make sure you save it somewhere secure since it has your Social Security number on it.
anybody else's employer constantly mess up their W-2?? my last company put the wrong social security number on mine 2 years in a row! had to get corrected ones both times which delayed my refund for months. so frustrating!!
Last year mine had the wrong state tax withholding amount. Double check all the numbers against your final paystub of the year! Box 1 (wages) and Box 2 (federal tax withheld) are the most important to verify. If there's a mistake, contact HR immediately for a corrected W-2.
One thing nobody's mentioned yet - if you file separately and your spouse itemizes deductions, you MUST also itemize even if your standard deduction would be higher. This screwed me over last year big time! My wife had medical expenses that made itemizing beneficial for her, but I had almost no deductions. I still had to itemize and lost out on about $2,000 of my standard deduction. Something to consider if one of you has significant deductions the other doesn't.
Thank you for mentioning this! I had no idea about this rule. Neither of us has enough deductions to itemize currently, but that's really good information to have. Would this apply even if only one of us has student loans? Or is that not related to the itemizing issue?
The student loan situation itself doesn't directly affect the itemizing rule. This rule only applies when one spouse chooses to itemize deductions - then the other spouse MUST also itemize, even if it's not beneficial. The student loans come into play in your decision about whether to file jointly or separately. If you file separately to keep your loan payments lower, then this itemizing rule could potentially become relevant if either of you has enough deductions to make itemizing worthwhile.
Just went thru this with my wife. We file separately even tho we lose some tax benefits bcuz her student loans r on PAYE (pay as you earn). We figured out we save like $4,300 a year on loan payments but only lose like $1,800 in tax benefits. BUT big warning - when u file separate u lose education credits, child tax credits, earned income credit, and cant contribute to Roth IRA if u make over $10k. Also cant deduct student loan interest. Def crunch the #s both ways!!
Did filing separately affect your ability to buy a house? We're in a similar situation but planning to apply for a mortgage next year and I'm worried that filing separately will make it harder to qualify.
8 Don't forget about state taxes too! Depending on your state, you might owe an additional 3-6% on that income. Some states also have their own penalties for not making estimated payments.
1 Oh no, I completely forgot about state taxes. I'm in Illinois - any idea what percentage they take for self-employment income?
8 Illinois has a flat income tax rate of 4.95% for all income types, including self-employment. Unlike some states, Illinois doesn't have a separate self-employment tax (just the state income tax). You'll need to file an IL-1040 along with your federal return. Illinois does have underpayment penalties similar to the federal ones, but they're typically smaller. If you qualify for the federal first-time abatement that others mentioned, you might be able to request similar relief from Illinois by attaching a letter explaining your situation when you file.
16 Quick tip from someone who's been freelancing for years: set aside 30-35% of EVERY payment you receive immediately into a separate tax account. I do automatic transfers so I'm never tempted to touch that money. Has saved me so much stress at tax time!
20 Do you make quarterly payments from that account? I've been putting aside money but never know exactly how much to send for quarterly payments.
Just to add another perspective - if you're expecting a refund, you have up to 3 years from the original due date to file and still get your money back. So for 2023 taxes, you have until April 15, 2027. After that, you lose your refund. But if you owe money, you should file ASAP to minimize penalties and interest which start accumulating from the original due date (April 15, 2024).
Thank you so much for mentioning this! I am pretty sure I'll be getting a refund based on my withholding, but I didn't realize there was actually a 3-year window. That takes some pressure off, though I still want to get this done soon. Do you know if the refund amount stays the same over those 3 years, or does it increase with interest or anything?
Unfortunately, the IRS doesn't pay interest on refunds if you file late. The refund amount stays exactly the same whether you file on time or 2 years late. That's actually why it's always best to file on time even if you're getting a refund - you're essentially giving the IRS an interest-free loan of your money for however long you delay.
Has anyone used freetaxusa for late filing specifically? Is there anything special I need to know about using it for late returns? I'm in a similar boat but worried the software might be different somehow for late filers.
Ahooker-Equator
Don't forget you might need to file a Schedule SE for self-employment tax if your LLC starts making profit. Even though you haven't made money yet, it's good to be prepared for when you do. Also, check if your state requires additional filings for LLCs even with no income - some states have annual LLC fees or reports regardless of profit.
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Anderson Prospero
ā¢Is it true that if your LLC makes less than $400 in a year, you don't have to pay self-employment tax? I heard that somewhere but not sure if it's accurate.
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Ahooker-Equator
ā¢Yes, that's correct. If your net earnings from self-employment are less than $400 for the year, you don't have to pay self-employment tax. However, you still need to report the income on your tax return regardless of the amount. Be aware that even if you don't owe self-employment tax, you might still need to file other forms related to your business activities depending on your situation. And some states do have minimum tax requirements for LLCs regardless of income, so always check your specific state rules.
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Tyrone Hill
One thing nobody mentioned - make sure you're tracking your business miles from day one even with no income! I drive to networking events, meetings, supply stores etc for my LLC and those miles are deductible on Schedule C even before you have revenue. The standard mileage rate adds up quick!
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Toot-n-Mighty
ā¢Is there an app you recommend for tracking business miles? I always forget to log them and probably missing out on deductions.
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