This happened to me too! The key thing to understand is that the safe harbor rules changed slightly after all the COVID relief expired. During COVID years, the IRS was much more lenient with underpayment penalties. What fixed it for me was adjusting my withholding at work by submitting a new W-4. Instead of trying to be precise, I just added a specific additional amount to be withheld from each paycheck (Line 4c on the W-4 form). I took what I owed last year, added a bit more as a buffer, then divided by the number of pay periods remaining in the year. Also definitely look into first-time penalty abatement if this is your first time getting hit with the penalty!

Just wanted to mention that the underpayment penalty rules changed slightly after the TCJA (Tax Cuts and Jobs Act) as well. It used to be that you could avoid the penalty by paying 90% of your current year tax OR 100% of your prior year tax (110% if your AGI was over $150k). Under TCJA, they briefly adjusted the 90% threshold down to 80% for one tax year, but then it went back to 90%. Some taxpayers got confused by this temporary change and didn't realize it reverted back. Also, the IRS uses a quarterly assessment for underpayment - meaning they look at when you made payments throughout the year, not just the total by end of year. If you made a lot of money early in the year but your withholding was more evenly distributed, that could trigger a penalty even if previous years didn't.

You're absolutely right about the documentation being key here. I've been dealing with this exact issue in my construction business for years. The IRS doesn't actually require you to get W-9s from every single day laborer - that's a common misconception that causes a lot of unnecessary stress. Here's what I learned from my tax attorney: for occasional workers paid under $600 annually, you just need to maintain adequate records showing the expense was ordinary and necessary for your business. This means keeping a simple log with dates, amounts paid, work performed, and ideally some form of acknowledgment from the worker (even just a first name and signature on a receipt). For your ATM records, you can definitely use those as supporting documentation. Create a log that matches your withdrawal dates to specific jobs, noting how many workers you hired, what work they did, and how much you paid each person. Photos of the work being done can also help establish the business purpose. The $600 threshold is per individual worker per year, not total payments to all workers. Since you're using different people each time, you're likely not hitting that threshold with any single worker. Just make sure you're consistent with your documentation going forward - the IRS values consistency and good faith effort to maintain proper records.

I've been running a small electrical contracting business for about 8 years and dealt with this exact same issue. The key thing to understand is that the IRS cares more about whether you can prove the expense was legitimate and business-related than having perfect W-9 documentation for every single person. Here's what worked for me: I created a simple "Daily Labor Log" that I keep in my work truck. For each job where I hire day laborers, I write down: date, job address, worker's first name, hours worked, rate paid, total amount, and what specific work they did. I also have them initial next to their entry - most people are fine with this since it's not asking for sensitive info. For your past expenses, definitely create that reconstruction log matching your ATM withdrawals to specific jobs. Include as much detail as you can remember - job locations, approximate dates, what work was needed, how many people you hired. This shows the IRS you're making a good faith effort to maintain proper records. The separate cash account idea mentioned above is genius - I wish I'd thought of that years ago. It would make everything so much cleaner come tax time. You're definitely on the right track with wanting to document these properly - these are legitimate business expenses that you absolutely should be able to deduct.

Sorry to jump in with a slightly different perspective, but isn't renting a different car each week extremely inefficient tax-wise? The standard mileage rate for 2024 is around 67 cents per mile, which accounts for ALL vehicle costs including depreciation. If you're paying $15,600 annually for rentals, you'd need to be driving nearly 23,300 business miles annually to make that worthwhile compared to just using your own vehicle and taking the standard deduction. Have you calculated if this approach actually makes financial sense?

You might also want to consider whether your photography business would benefit from a dedicated business vehicle instead of weekly rentals. As a fellow creative professional, I understand wanting to protect your personal car from wear and tear, but there could be more tax-efficient approaches. For example, you could lease a vehicle exclusively for business use and deduct 100% of the lease payments, or purchase a used vehicle and depreciate it over time. This would eliminate the need to track personal vs. business use percentages entirely. That said, if the rental approach works best for your workflow (maybe you need different vehicle sizes for different shoots?), just make sure you're documenting everything meticulously. The IRS can be particularly scrutinous of Schedule C vehicle deductions, so having ironclad records is crucial. Consider setting up a simple system where you log business purpose, mileage, and take photos of receipts immediately after each rental period. Also, don't forget about other deductible expenses related to your vehicle use - things like GPS apps, car phone mounts, or other equipment you need for business travel can also be deducted as business expenses.

One additional consideration that hasn't been mentioned yet - since you and your sister both received the property together via the quitclaim deed, you'll likely need to determine how to split the capital gains tax liability when you sell. The tax consequences will depend on whether you're considered joint tenants or tenants in common, which should be specified in the quitclaim deed. Also, make sure to factor in selling costs (realtor commissions, closing costs, etc.) when calculating your capital gains - these can be deducted from your gain to reduce the taxable amount. Given that the property has appreciated significantly since the 90s and you're using your father's original basis, every deduction will help minimize your tax burden. If the capital gains are going to be substantial, you might want to consider an installment sale if your buyers are willing - this allows you to spread the tax liability over several years rather than taking the full hit in 2025.

I went through something very similar with my father's property last year. One thing that really helped us was getting a professional appraisal of the property value as of the date your father executed the quitclaim deed, not just when he originally purchased it. While you can't get the step-up in basis that comes with inheritance, if your father made any significant improvements over the years, those can be added to his original basis. Also, don't forget about depreciation recapture if your father ever claimed depreciation on the property (like if he rented it out at any point). This gets taxed as ordinary income up to 25%, not at the capital gains rate. For the Form 709 question - yes, your sister should file this with his final return if the property value exceeded the annual gift exclusion ($17,000 in 2023). The good news is that it likely just reduces his lifetime gift/estate tax exemption rather than creating an immediate tax liability. One strategy we used was timing the sale carefully. Since you received the property in June, waiting until after June 2025 to close ensures you get long-term capital gains treatment. Even a few weeks difference in timing could save you significantly if it moves you from short-term to long-term rates.

As someone who's been through this exact situation multiple times, I can share that H&R Block's timing with the Emerald Card is generally consistent but not guaranteed. In my experience over the past 4 years, I've received my refund 1 day early about 75% of the time. The key factor seems to be when the IRS actually transmits the ACH file to H&R Block - if it's sent on a Thursday for a Friday DDD, you'll likely see it Thursday evening or Friday morning. However, if there are any processing delays on the IRS side, it comes exactly on the DDD. I'd recommend setting your expectations for the exact date (5/15/2024) but don't be surprised if you wake up to find it in your account on 5/14. The uncertainty is frustrating, but at least the Emerald Card doesn't charge fees for the deposit itself!

Thanks for this detailed question! As a fellow taxpayer who's dealt with similar timing uncertainties, I can share that H&R Block's Emerald Card deposit timing really does vary. From what I've observed and experienced, they tend to follow the ACH processing window pretty closely - so if the IRS sends the file early (which they usually do), H&R Block typically makes it available within hours rather than holding it until the exact DDD. However, I've learned not to count on it for budgeting purposes since there can always be processing delays on either the IRS or H&R Block side. Your DDD of 5/15/2024 falling on a Wednesday is actually good timing since weekday DDDs tend to be more predictable than weekend ones. I'd suggest checking your account Tuesday evening/night just in case, but plan your finances around Wednesday to be safe. The anticipation is always nerve-wracking, but at least the Emerald Card doesn't have deposit fees like some other tax refund products!