Your total tax bill seems in line with what I experienced when I was fully self-employed. The breakdown was roughly: - Regular income tax: ~22% effective rate - Self-employment tax: ~15.3% (Social Security + Medicare) That puts you right around 37% total, but deductions usually bring it down to 30-33%. It sucks, but it's the reality of self-employment. One thing that helped me was switching to making monthly tax payments instead of quarterly. Psychologically it felt better to pay $5-6k monthly than to get hit with $16-18k quarterly bills.

I feel your pain! I'm also a self-employed photographer and went through the exact same shock last year. That 30% tax rate is unfortunately very normal for our income level. What helped me was realizing that employees making the same amount effectively pay similar rates - they just don't see it because their employer covers half the Social Security/Medicare taxes and withholds everything from their paychecks. We get hit with the full reality all at once. A few things that made it easier for me: - Opened a separate "tax savings" account and automatically transfer 35% of every payment I receive - Started making estimated payments monthly instead of quarterly (you can send them anytime, not just on the due dates) - Maxed out my SEP-IRA contribution which reduced my taxable income by $69,000 last year The retirement account contributions alone saved me about $20k in taxes. If you haven't set one up yet, you have until your tax filing deadline (including extensions) to contribute for 2024. It's still a lot of money, but at least now I budget for it properly instead of getting blindsided every year.

This is really helpful information! I'm new to this community but definitely not new to tax procrastination unfortunately. I'm one of those people who somehow let 2024 slip by without filing, and now I'm scrambling with this shutdown deadline looming. I have a question about timing that I haven't seen addressed yet - if I do manage to get my return prepared and e-filed through a tax professional before Thursday's shutdown, how long should I expect to wait for processing? Is there any advantage to filing right before the shutdown versus filing early in a normal year, or does it all just sit in the same queue? Also, I'm seeing some conflicting information online about whether certain tax software companies have already shut down their e-filing for individual returns. Does anyone have a current list of which services are still accepting e-filed returns this week versus which ones have already closed for the year? The penalty information shared by the tax professionals here is definitely motivating me to stop dragging my feet. Better late than never, but also better this week than in January if I can manage it!

This is such a great breakdown of the shutdown timeline! I had no idea the e-filing system would be down for almost two months. I'm definitely one of those people who's been putting off my 2024 return, and this post is the wake-up call I needed. I'm in a situation where I moved states mid-year and changed jobs, so my tax situation is more complicated than usual. Based on what everyone's saying about the rush before shutdown, I'm thinking my best bet might be to get everything organized this week but wait for January to file with a professional when they're less rushed and can give my complex situation proper attention. One thing I'm curious about - for those who have been through this shutdown period before, does the IRS typically stick to their projected reopening timeline, or do they sometimes extend the maintenance period? I'm trying to plan when to expect my refund if I wait until January to file. Thanks for all the detailed advice from the tax professionals here - this community is incredibly helpful for navigating these timing issues!

Has anyone dealt with donating to fundraising events where they auction off "free pizza for a year" certificates or something similar? Is that still deductible as a food donation or is it handled differently?

Great question! I run a bakery and went through the same learning curve with food donations. One thing that really helped me was setting up a simple system to track everything from day one rather than trying to reconstruct it at tax time. I keep a small notebook by our register where we quickly jot down any donations - date, what we donated, to whom, and our rough cost basis. Then once a week I transfer it to a spreadsheet with the proper calculations. A few practical tips: For schools, I always ask for their tax-exempt number upfront and keep a list of the local qualified organizations we regularly donate to. Also, don't forget about labor costs in your cost basis calculation - if you're making pizzas specifically to donate, include a reasonable amount for the time spent preparing them. The enhanced deduction really does add up over the year, especially if you're donating weekly like it sounds. Just make sure you're being conservative with your fair market value estimates and keeping good records. The community goodwill alone makes it worthwhile, but the tax benefit is a nice bonus!

I went through something very similar last year! Lost about $11k on crude oil futures while having $9k in gains from some Microsoft shares I'd held for 18 months. The good news is yes, your Section 1256 contract losses will definitely offset your stock gains. What really helped me understand this was learning that the IRS treats Section 1256 contracts completely separately from regular securities for tax purposes. Your $13k futures loss gets the special 60/40 treatment (60% long-term, 40% short-term) regardless of how long you held the contracts, and then it flows to Schedule D where it offsets your other capital gains. One thing that caught me off guard was how the broker reporting worked. Make sure you get your 1099-B from your futures broker - it should clearly show the Section 1256 treatment. My regular stock broker's 1099-B looked completely different from my futures broker's 1099-B, but both fed into the same Schedule D on my tax return. The silver lining is that this experience taught me a lot about tax-efficient trading strategies. Now I'm much more careful about position sizing in futures, but at least the tax code doesn't penalize you for learning expensive lessons!

I've been following this thread closely since I'm in a very similar situation - made some decent gains on dividend stocks this year but took a beating on corn futures (lesson learned about commodity volatility!). One thing I wanted to add that hasn't been mentioned is the importance of keeping detailed records of your futures trading, especially if you made multiple trades. The mark-to-market treatment means every single futures position gets treated as closed on December 31st for tax purposes, even if you're still holding it. This can create a lot of phantom transactions on your tax forms. I learned this the hard way last year when my 1099-B from my futures broker had pages and pages of what looked like trades I never made - but they were just the mark-to-market adjustments. Make sure you save all your account statements and trade confirmations because sometimes the 1099-B doesn't tell the whole story, especially if you transferred positions between tax years. Also, if you're using tax software, double-check that it's correctly importing the Section 1256 data. Some of the basic versions don't handle Form 6781 properly and might not apply the 60/40 split correctly. TurboTax Premier worked fine for me, but the basic version was missing some features for investment trading.

My tax attorney suggested a completely different approach that might be worth considering. Instead of using an LLC or trust, he recommended my father do a "qualified personal residence trust" (QPRT) for exactly this scenario. Basically, my dad put the house in a QPRT for a fixed term (3 years in our case), during which he retained the right to live in it or rent it out. After the term expired, ownership automatically transferred to us kids, but the gift value for tax purposes was significantly discounted because of the retained interest.

Another consideration that might impact your decision is depreciation recapture. Since your father will be renting the property for 1-2 years before transferring it, he'll likely claim depreciation deductions on his tax returns during that period. When the property is eventually sold (regardless of whether it's held in an LLC or trust), any depreciation your father claimed will need to be "recaptured" and taxed at up to 25%. This applies to the entire depreciation amount he claimed, not just your portion. If your brothers plan to live in the house as their primary residence for at least 2 years before any sale, they might be able to exclude some of this recapture on their portions through the primary residence exclusion, but this gets complicated with mixed-use properties. You'll want to discuss with your attorney whether it makes sense for your father to forgo depreciation deductions during the rental period to avoid this issue, or if the current tax benefits outweigh the future recapture. This consideration applies regardless of the ownership structure you choose.