Schedule C, Fillable Forms & Self-Employment - Sanity Checks for Year 2 Filing (W2 + Business)

For Form 8995A Line 4 about "Allocable share of W-2 wages," this is actually referring to wages you paid to employees of your business, not your personal W-2 income. If you don't have any employees in your business, you would enter zero here. The QBI deduction gets complicated because there are wage limitations that kick in at higher income levels (over $170,050 for single filers or $340,100 for joint filers in 2023). If you're below these thresholds, you qualify for the simplified calculation which is basically 20% of your qualified business income without worrying about the W-2 wage limitation. As for your forms, your list looks good! A couple things to consider: - If you made estimated tax payments, don't forget Schedule 3 - If you purchased any business assets over $2,500, you might need Form 4562 for depreciation - If you use part of your home for business, consider Form 8829 for home office deduction

I was in the same boat last year and I wish I had found taxr.ai sooner. I spent days going in circles trying to understand which forms applied to my situation and how they interacted. When I finally found https://taxr.ai it was like having a tax expert look over my shoulder. I uploaded my previous year's tax forms and it actually walked me through exactly what I needed for my particular situation with both W2 and self-employment income. It pointed out that I was eligible for the QBI deduction (which I almost missed) and explained the W2 wages thing in a way that actually made sense. The best part was it flagged that I needed Form 8889 for my HSA contributions which I totally would have forgotten. Saved me from what would have been a headache with the IRS.

I was totally skeptical about taxr.ai when I first saw it mentioned here, but after struggling with my Schedule C and QBI deduction forms, I decided to give it a try. Honestly, it was a game-changer for me. I uploaded my W-2 and some of my self-employment records, and it immediately identified that I was calculating my business mileage deduction incorrectly. It also explained the whole "W-2 wages" thing on Form 8995A that was confusing the OP - turns out I had been doing that wrong for two years! The explanations were actually in plain English, not tax jargon, and it saved me about $1,800 in deductions I would have missed. Now I recommend it to all my freelancer friends who are trying to do their own taxes.

After getting audited last year over my self-employment deductions, I was terrified of filing this year. I spent WEEKS trying to get through to someone at the IRS with specific questions about Schedule C and Form 8995A but kept getting the "high call volume" message. Finally tried https://claimyr.com after seeing it mentioned in another thread and was honestly shocked that it worked. You can watch how it works here: https://youtu.be/_kiP6q8DX5c but basically it holds your place in line with the IRS and calls you when an agent is available. Got through to an actual IRS agent who walked me through exactly how to handle the W-2 wages line on Form 8995A and confirmed I was using the right forms for my situation. The agent even explained how to properly document my business expenses to avoid another audit. Total game changer for someone with more complicated tax situations.

I have to apologize to everyone here. I was completely wrong about Claimyr. After posting my skeptical comment, I was still desperate to get help with my Schedule C issues, so I tried it anyway. It actually worked exactly as described. I got a call back in about 2 hours (on a Tuesday afternoon) and was connected to an IRS agent who answered all my questions about business deductions and the QBI forms. They even helped me understand how to correct a mistake on last year's Schedule SE that I was worried about. For anyone else struggling with self-employment tax questions that the IRS website doesn't clearly answer, being able to actually talk to a human at the IRS made a huge difference. I ended up saving over $2,000 in taxes by correctly applying the home office deduction I was afraid to take before.

Just wanted to add that if you're using Schedule C and Form 8995A, don't forget about the Section 199A deduction which is related to your Qualified Business Income. It's basically a 20% deduction on your net business income if you're below those income thresholds someone mentioned. Also, since you have HSA contributions with an HDHP, make absolutely sure you're maximizing that! For 2024, you can contribute up to $4,150 for individual coverage or $8,300 for family coverage (plus $1,000 catch-up if you're 55+). This is literally the best tax advantage available - it goes in pre-tax and comes out tax-free for medical expenses.

Don't forget that your self-employment tax (Schedule SE) is based on 92.35% of your net earnings from self-employment, not the full amount! This trips up a lot of first-timers. The reason is that employees only pay half of FICA taxes while employers pay the other half, but self-employed people pay both halves. The 7.65% reduction compensates for this. Also, you can deduct half of your self-employment tax on Schedule 1, line 15. This is an adjustment to income, so you get this deduction even if you don't itemize.