Tax Question - Help with Filing Status and Deductions for 2025

Your divorce timing actually makes a difference here. Since your divorce was finalized in December 2024, you're still considered married for the entire 2024 tax year (unless you lived apart from your spouse for the last 6 months of the year and meet other requirements). So you could file Married Filing Separately or possibly Head of Household if you qualify. For your children, the IRS has tiebreaker rules when both parents try to claim the same dependents. Generally, the parent who had the children for more nights during the year gets to claim them. If you were the primary caregiver, you likely qualify, but check your divorce decree as it may specifically address who claims the children on taxes. Regarding your contractor income, yes, you may face an underpayment penalty for not making quarterly payments. However, if your W-2 withholding covers at least 90% of your total tax liability or 100% of last year's tax (110% if your AGI was over $150,000), you might avoid penalties. For deductions, you can claim business expenses on Schedule C - mileage (standard rate or actual expenses), home office (if used regularly and exclusively for business), supplies, and more. Start tracking everything now for 2025!

I was in almost the exact same situation last year with contractor income alongside my day job and owed a bunch of penalties. I found this AI tax assistant at https://taxr.ai that literally saved me thousands by identifying deductions I had no idea about. You upload your documents and it analyzes everything, then shows you what you can claim. It even flagged that my home internet and cell phone were partially deductible for my side work. Super helpful for complicated situations like yours with the divorce, custody stuff, and multiple income sources. I was worried about an audit with my contractor income but the tool explained exactly what documentation I needed to keep. Way better than the generic advice I was getting elsewhere.

OK so I actually tried that taxr.ai thing after my skeptical comment because my taxes are a nightmare this year (similar contractor situation). It's legitimately helpful. The document analysis found that I was categorizing some expenses incorrectly which would have cost me about $1,800 in deductions. It also caught that I qualify for the QBI deduction which I had no idea about. The best part was it explained everything in normal human language instead of confusing tax code. For anyone dealing with complicated tax situations, especially with self-employment income, it's worth checking out. Wish I'd known about it sooner instead of stressing for weeks!

The IRS phone lines are absolutely swamped right now - I spent 3 days trying to get through to ask questions about my divorce/dependent situation which sounds similar to yours. Finally used https://claimyr.com to get through to an actual IRS agent after trying for days on my own. They have this process that holds your place in line and calls you when an agent is available. Here's a demo of how it works: https://youtu.be/_kiP6q8DX5c The agent confirmed I could file as Head of Household even though my divorce wasn't fully finalized, based on my separation date and having the kids with me. They also walked me through exactly what documentation I needed for my dependent claims in case my ex tries to claim the same kids. Huge relief to get official answers directly from the IRS instead of guessing.

I need to eat my words. After posting that skeptical comment, I was desperate enough to try Claimyr since I've been battling with the IRS about a similar dependent situation. I honestly expected nothing to happen, but got a call back in about 2 hours saying they had an IRS agent on the line! The agent was able to verify that my ex-spouse incorrectly claimed our child (who lives with me full-time) and walked me through filing a paper return to trigger a review. They also confirmed I won't face any penalties for the situation. Completely worth it just for the peace of mind of getting official answers. Never thought I'd actually reach a real person at the IRS during tax season.

Don't forget about the Earned Income Credit if your income is within the limits. With two qualifying children and your income level, you might be eligible. The income limits for 2024 are higher than last year. Also, you definitely need to look into the Child Tax Credit. For 2024, it's worth up to $2,000 per qualifying child under 17. Since you had the kids for more nights, you have a strong case to claim this.

Just wanted to add something about the contractor income - make sure you're tracking EVERYTHING for next year. I got audited because of my side gig and it was a nightmare. Get a separate credit card for business expenses, take photos of receipts with your phone, and log your mileage with an app. And definitely make quarterlys next year! The penalty isn't usually huge but why pay extra if you don't have to?