Clay, I've been reading through all the fantastic advice you've received here, and it sounds like you have a solid plan moving forward! As someone who works in payroll, I wanted to add a quick practical tip that might help ease your transition. When you submit your W-4 to your new employer, consider mentioning to HR or payroll that you're doing a mid-year job change with a salary increase and want to be conservative with withholding to avoid owing taxes. Most payroll professionals have seen this situation before and can often provide helpful guidance or at least confirm that your approach makes sense. Also, don't be surprised if your withholding amounts look different than you expect on your first paycheck - sometimes there are timing issues with when new W-4s take effect, or other deductions you hadn't fully considered. That's totally normal and why the "reassess after a few paychecks" approach everyone's mentioned is so smart. The conservative strategy with box 2(c) plus extra withholding that you've settled on is exactly what I'd recommend to someone in your situation. You're making a smart choice prioritizing peace of mind over trying to optimize to the exact dollar. Best of luck with the new position - you've clearly done your homework on handling this transition properly!

Clay, this is such a comprehensive discussion with amazing advice! As someone who's been through multiple job changes, I can tell you're in great hands with all the guidance you've received here. I wanted to add one small tip that helped me when I was in a similar situation - keep a copy of your final pay stub from your current job and your W-2 when you get it. Having that documentation easily accessible made it so much smoother when I needed to reference my previous job's income and withholding amounts for the IRS calculator and when filing taxes. The conservative approach everyone's recommended (box 2(c) plus $80-100 extra withholding per paycheck) is exactly right for your situation. With a $15k salary increase starting mid-year, you're smart to err on the side of caution. One thing that really stood out to me from this thread is how many different tools and resources people have successfully used - from the IRS calculator to various third-party services. The key seems to be starting with a conservative W-4 setup and then fine-tuning once you have real data to work with. Congratulations on the new opportunity! Don't let the W-4 complexity overshadow what's clearly an exciting career advancement. You've got a solid plan now, and this community has your back if you need to adjust anything later.

Has anyone in a similar situation actually been audited over this? My partner and I split our mortgage 50/50 but we've been claiming it unequally (higher earner takes more) for years with no issues.

Another option to consider is consulting with a tax professional who specializes in these situations. I know it costs money upfront, but given the complexity of your situation and the potential tax savings, it might be worth the investment. A CPA can review your specific financial arrangement and provide written documentation of their recommendation. This gives you professional backing if the IRS ever questions your filing approach. They can also run the numbers on multiple scenarios (splitting 50/50, one person claiming all, etc.) to show you exactly which saves the most money. I learned this the hard way - tried to figure it out myself for two years and missed out on significant savings. Finally paid for a consultation and discovered I'd been leaving money on the table. The consultation fee paid for itself in the first year through better tax planning.

Brandon, based on your employee structure and salary ranges, you're definitely going to need to navigate these tests carefully. With yourself at $190k and potentially 2-3 managers over the $150k threshold, you'll have a significant HCE group relative to your total workforce. One thing I'd recommend is tracking your contribution rates monthly rather than waiting until year-end. We learned this the hard way after failing ADP testing two years running. Your 8 out of 12 participation rate is actually pretty solid, but what matters more is the actual deferral percentages. A few practical tips from our experience: encourage your non-HCE employees to contribute at least 3-6% if possible, consider implementing automatic enrollment with an opt-out (this really helps boost non-HCE participation), and maybe look into adding a small match even if it's just 1-2% - it incentivizes participation among your lower-paid employees which helps balance the averages. The Safe Harbor route that others mentioned is worth serious consideration for 2026 if you want to eliminate this headache entirely. Yes, it costs more upfront with the required matching, but the peace of mind and ability for your high earners to max out contributions without worry often makes it worthwhile for small businesses like ours.

Brandon, you're in a pretty typical situation for small businesses. With your salary structure, you'll definitely have some HCEs to manage in the testing. Here's what I'd focus on immediately: First, get clarity on your exact HCE count. For 2025 testing, anyone who earned over $150k in 2024 OR owns more than 5% of the business qualifies. So that's likely you plus 1-2 of your managers depending on their exact 2024 earnings. The key insight most small business owners miss is that the tests look at actual deferral percentages, not dollar amounts. So if your HCEs are contributing 10% and your non-HCEs are only contributing 3%, you'll likely fail even with good participation rates. My recommendation: start tracking this quarterly. Have your payroll provider or 401k administrator run preliminary ADP calculations every few months. This gives you time to either encourage non-HCE contributions (through education, small bonuses, or matches) or ask your HCEs to dial back their contributions if needed. Also consider the "top-heavy" test - if your key employees (owners + officers + highest paid) account for more than 60% of total account balances, you'll need to make additional contributions to non-key employees. This often catches small business owners off guard in year 2-3 of their plan. The testing isn't as scary as it sounds once you understand the mechanics, but definitely stay proactive about monitoring throughout the year.

Yes, technically you need to report ALL gambling winnings regardless of amount - including that $15 Tuesday night win. The IRS doesn't have a minimum threshold for reporting gambling income, unlike some other types of income. However, the practical reality is different from the technical requirement. For audit risk, the IRS typically focuses on larger discrepancies or patterns that suggest significant unreported income. If you're a casual bettor with modest winnings and you're making a good faith effort to report your major wins, you're probably not going to be a priority for audit. But if you have substantial betting activity or receive multiple W-2G forms, you definitely want to be more precise. The annual summary statements from sportsbooks usually show your net winnings for the year (total payouts minus total stakes), which makes reporting much simpler. Instead of tracking every individual $15 win, you can use the net figure from your summary. Just make sure the summary actually reflects net winnings and not gross payouts - different books format these differently. One thing to watch out for: if you use multiple sportsbooks, you'll need to get summary statements from each one and combine them properly. Also, some books might show gross winnings on their summaries, so double-check the methodology they're using.

The distinction between gross and net winnings on sportsbook statements is crucial - you'll want to look at the column headers carefully. Net winnings statements will typically show something like "Net Winnings" or "Profit/Loss" while gross statements might say "Total Payouts" or "Amount Won." If you see a column that shows the full amount returned to you (including your original stake), that's gross. What you want for tax purposes is the profit-only amount. Most major books like DraftKings and FanDuel default to net winnings in their annual summaries, but smaller or offshore books might vary. Using multiple sportsbooks isn't suspicious at all - it's actually very common for bettors to shop for better odds and bonuses. The IRS expects people to use multiple platforms. Just make sure you're reporting the combined totals from all platforms accurately. If anything, having records from multiple regulated US sportsbooks makes your reporting more credible since these companies also report to the IRS. Pro tip: Download your annual statements from all your books in January while they're still available. Some books only keep them accessible for 90 days after year-end, and you don't want to be scrambling in March trying to reconstruct your records.

You're in exactly the right place asking these questions! Yes, as a solo artist making income through Patreon, you're definitely a sole proprietor and should check that box on your W-9. The IRS doesn't care that you're single or don't have kids - what matters is that you're earning income from your own business activities. One thing I'd strongly recommend is getting familiar with the "hobby vs. business" rules since you're making consistent income now. The IRS looks at factors like whether you operate in a businesslike manner, keep good records, and have a profit motive. Since you're making $850/month regularly, you're clearly past hobby territory, which is great for deduction purposes. Don't forget to track EVERYTHING - your drawing tablet, software subscriptions, art supplies, reference materials, even courses or books that help improve your skills. If you attend any art conventions or workshops (even virtually), those can be business expenses too. And if you're using your phone for business communications with patrons or promotion, a portion of that bill is deductible. The self-employment tax might seem scary at first (15.3% on top of regular income tax), but remember you can deduct half of it, and all those business expenses help reduce your taxable profit. You've got this!

Isabella, congratulations on building such a successful Patreon! You're absolutely correct to check the "Individual/sole proprietor or single-member LLC" box on your W-9. Since you're operating as yourself without any formal business entity, you're a sole proprietor by default. A few additional things to consider as you navigate this transition: First, since you're consistently earning $850/month, you're looking at over $10K annually in self-employment income. This means you'll likely need to make quarterly estimated tax payments to avoid penalties. You can either increase withholding at a day job (if you have one) or make payments directly to the IRS using Form 1040-ES. Second, start documenting everything business-related NOW. Your drawing tablet depreciation, software subscriptions (Adobe, Clip Studio, etc.), art supplies, reference books, online courses, and even a portion of your internet/phone bills can be legitimate business deductions. If you have a dedicated workspace in your apartment, look into the home office deduction too. Finally, consider opening a separate bank account for your Patreon income and business expenses. This makes record-keeping much easier and helps establish that you're running a legitimate business rather than just a hobby. The IRS loves to see clear separation between personal and business finances. You're asking all the right questions - that's half the battle! Keep creating and don't let the tax stuff overwhelm you.