The withholding difference between Single and Head of Household can be significant! I switched last year and saw about $85 more per biweekly paycheck. One thing to keep in mind is that Head of Household has better standard deduction amounts too - for 2025 it's $22,200 compared to $14,600 for Single filers. This contributes to the lower withholding throughout the year. Also, don't forget to update your W-4 with HR as soon as possible if you decide to make the change. The sooner you do it, the sooner you'll start seeing the increased take-home pay. Just double-check that you meet all the HOH requirements first - the IRS is pretty strict about this filing status.

Great question! As others have mentioned, switching to Head of Household will definitely result in LESS withholding (meaning MORE take-home pay) compared to Single status. This happens because: 1. Head of Household has more favorable tax brackets - you pay lower rates at each income level 2. The standard deduction is much higher ($22,200 vs $14,600 for Single in 2025) 3. With three dependents, you'll benefit from Child Tax Credits being factored into your withholding At your $52,000 income level with three kids, you're looking at roughly $75-120 more per paycheck depending on your pay frequency. This should definitely help with those tight monthly budgets! Just make absolutely sure you qualify for HOH (sounds like you do based on your description) and update your W-4 properly. Fill out Step 3 carefully to account for all three dependents - this is crucial for getting the right withholding amount. The extra money in your paychecks throughout the year will be much more helpful than getting a big refund later!

I'm in the exact same boat as you! Just switched to S-corp about 6 weeks ago and was totally overwhelmed by all the payroll options. After reading through everyone's suggestions here, I'm leaning toward either Patriot Payroll (love that $21/month price point) or maybe trying the DIY approach with a good spreadsheet system. One thing I learned from my accountant is that you really want to get your payroll set up ASAP since the IRS expects consistent payments throughout the year. Waiting too long and then trying to catch up with back-dated payroll can look suspicious and cause headaches. Has anyone dealt with setting up the actual business bank account requirements for payroll? My bank is asking about payroll tax accounts and I'm not sure if I need a separate account or if my regular business checking will work for the tax deposits.

As someone who just went through this transition last year, I'd strongly recommend getting your payroll set up within the next week or two. The IRS really doesn't like seeing irregular payment patterns in your first S-corp year - it can trigger unwanted attention. For budget-friendly options, I'd echo the Patriot Payroll recommendation at $21/month. I actually started with them and found their interface really straightforward for beginners. The customer service was patient with all my newbie questions too. One thing I wish someone had told me earlier: whatever salary you decide on, try to stick with it consistently throughout the year rather than adjusting it quarterly based on business performance. The IRS prefers predictable W-2 wages. You can always take additional distributions if you have a good quarter. Also, don't forget to register for an EFTPS account with the IRS for your tax deposits - most payroll services will handle this automatically, but it's good to understand the process. Good luck with your first year as an S-corp!

Don't forget about quarterly estimated tax payments if you start making decent money from your books! I didn't do this my first year and got hit with penalties. If you expect to owe more than $1,000 in taxes from your publishing income, you need to make quarterly payments. The IRS Form 1040-ES helps calculate these. The deadlines are April 15, June 15, September 15, and January 15 of the following year. Also, remember you'll be paying self-employment tax (15.3%) on top of your regular income tax rate. This catches a lot of new authors by surprise!

Great advice throughout this thread! As someone who's been self-publishing for a few years, I'd add one more important point: consider opening a Solo 401(k) for your publishing business income. Since you're already earning W-2 income from your day job, you can still contribute to a Solo 401(k) based on your self-employment earnings from book sales. This allows you to shelter a significant portion of your publishing profits from taxes - you can contribute up to 25% of your net self-employment income (or 20% if you calculate it precisely). For 2025, the contribution limit is $70,000 total, though most new authors won't hit that. The Solo 401(k) is especially powerful because contributions reduce your taxable income dollar-for-dollar. So if you make $10,000 profit from book sales, you could potentially contribute $2,000 to the Solo 401(k), reducing your taxable self-employment income to $8,000. You still pay self-employment tax on the full amount, but you save on income tax. Just make sure your publishing activity qualifies as a legitimate business (sounds like yours does) and that you're showing a profit motive. The IRS wants to see that you're trying to make money, not just pursuing a hobby.

Just to add to this conversation - I've been a 1099 contractor for schools for 7 years now. Make sure you're tracking your quarters of coverage for Social Security! You need 40 quarters (10 years) of coverage to qualify for retirement benefits. For 2025, you need to earn $1,820 in a quarter and pay self-employment tax on it to get credit for that quarter. If you earn $7,280 or more for the year and pay your self-employment taxes, you'll get credit for all four quarters even if you only worked part of the year.

Your tax preparer was definitely trying to upsell you unnecessary services! As everyone has confirmed, when you pay self-employment tax on your 1099-NEC income, you ARE contributing to Social Security - exactly 12.4% of your net earnings goes toward Social Security and 2.9% toward Medicare. I went through this same confusion a few years ago when I started contracting. The key thing to understand is that you're paying both the employee AND employer portions of Social Security taxes (hence the 15.3% total), but you get to deduct half of that self-employment tax on your return, which helps offset some of the burden. You don't need an EIN or payroll setup just to contribute to Social Security. That would only make sense if you were considering an S-Corp election to potentially save on self-employment taxes, but at your income level, the added complexity and costs probably aren't worth it. Keep filing your Schedule C and Schedule SE as you have been - you're doing everything correctly! Your 1099 income is building your Social Security credits just like W-2 income would.

For the student loan aspect - which I'm guessing is why y'all are filing separately - make sure you really run the numbers! Sometimes the tax benefits of filing jointly outweigh the student loan payment savings. My wife and I were in a similar boat (about 220k vs 85k incomes) and we found that we saved more overall by filing jointly and just paying the higher loan payment. Totally depends on how much debt, interest rates, and how close to forgiveness you are though.

Great question! As someone who's navigated this exact scenario, here are the key factors to consider: **Tax Credits:** With your income levels, you'll want to calculate who can still qualify for the Child Tax Credit. The phase-out begins at $200k for single/MFS filers, so your spouse at $98k would likely get the full $2,000 per child credit, while you might be partially or fully phased out. **Student Loan Impact:** This is huge! Whoever claims the kids will have a larger household size for IDR calculations, which typically means lower monthly payments. Given that your spouse is the one with student loans, having them claim the children could significantly reduce their monthly obligation. **Head of Household:** Since you lived together, neither of you can file as Head of Household, so you're both stuck with MFS rates. **My recommendation:** Have your spouse claim both children. They'll likely get better tax benefits due to income limits, AND it will help with the student loan payments by increasing their household size for IDR purposes. Definitely run the numbers both ways to be sure, but in most cases with your income split, the lower earner claiming dependents works out better overall when you factor in both tax savings and loan payment reductions.