This is why startup equity compensation is such a minefield. I messed up my 83(b) filing too but in a different way - I filed it but forgot to include a copy with my tax return, which apparently also invalidates it. Anyone know if there's any possible relief or exception? I've heard rumors about a "reasonable cause" exception for late filings?

I feel your pain on this one! Missing the 83(b) election is unfortunately more common than you'd think, especially at startups where HR doesn't always explain the importance clearly. Since your initial FMV was $0.00, you're actually in a relatively good position compared to others who miss this deadline. The main thing to understand is that now you'll be taxed on ordinary income as your shares vest based on their fair market value at each vesting date. My advice: start preparing financially now. Set up a separate savings account and begin putting money aside for the tax bills that will come with each vesting event. If your company has had any funding rounds or valuation increases since you received your equity, those taxes could be substantial even though you won't have cash from selling shares to pay them. Also, make sure you understand exactly when your vesting dates are and try to get the company's most recent 409A valuation reports so you can estimate what you'll owe. Being proactive about this will save you from scrambling when tax time comes around.

Just to add some practical info on donation values - I volunteer at a nonprofit thrift store and here are some ballpark clothing values we use that the IRS generally accepts: - Men's shirts: $5-10 - Women's tops: $4-12 - Jeans/pants: $5-12 - Coats/jackets: $10-40 - Shoes: $3-9 These are general ranges and condition matters a lot! A worn-out shirt is worth less than a like-new one with tags still on.

Don't forget that it's not just about the amount of donations - it's whether you have enough TOTAL itemized deductions to exceed the standard deduction. My wife and I donate about $1,200 a year but we still take the standard deduction because our mortgage interest and state taxes aren't enough to push us over the threshold.

Has anyone actually checked if not claiming legit business expenses could trigger an audit? I've always been told that the IRS algorithms flag returns that don't match expected patterns for your industry. Like if most bookkeepers claim around 20-30% expenses but you claim zero, wouldn't that look weird?

I think you're overcomplicating this. The math is pretty straightforward - you should always claim your legitimate business expenses because of the self-employment tax implications that others have mentioned. Here's why: In your Option 1, you'd have $16,000 in net earnings subject to SE tax (15.3%), which is about $2,448 in SE taxes. In your Option 2, you'd have $20,000 in net earnings subject to SE tax, which is about $3,060 in SE taxes. That's an extra $612 you'd be paying unnecessarily. Plus, your Solo 401k contribution limits are based on your net self-employment earnings anyway, so claiming legitimate expenses doesn't actually hurt your contribution capacity - it just makes your tax situation more accurate and saves you money on SE taxes. The IRS doesn't care if you don't claim every possible deduction, but why would you voluntarily pay more taxes than you legally owe? Take the deductions you're entitled to, pay the correct amount of SE tax, and then contribute what makes sense to your Solo 401k based on your actual net earnings.

Ive been a tax preparer for 8 years and ppl get confused about this all the time! Here's a quick cheat sheet for adult kids: 1. Over 19 (or over 24 if student) + income over $4,700 = NOT your dependent 2. Under 19 (or under 24 if student) + income ANY amount = CAN be your dependent if you provide >50% support and they live with you The only exception is permanently disabled adult children who can be dependents regardless of age.

Just to add another perspective - I went through this exact situation with my 19-year-old last year. She made about $6,800 working retail and I was so frustrated that I couldn't claim her even though I was paying for everything else in her life. What helped me was looking at it this way: even though you lose the dependent exemption, your kids will likely get most of their withheld taxes back as refunds since they're in such low tax brackets. In my daughter's case, she got back about $900 that had been withheld from her paychecks. Also, don't forget that you might still qualify for other tax benefits even if you can't claim them as dependents. If either of your kids takes any college courses (even just one class), you could potentially claim education credits. And if you're paying for their health insurance, you can still deduct those premiums in some situations. The IRS rules seem harsh but they're designed to prevent double-dipping - your kids get to keep their refunds, and the system assumes adults earning income should file their own returns.

A $10.5k refund means your essentially giving the government an interest-free loan of almost $900 a month!!! Thats crazy in this economy. I changed my withholdings last february and now i get an extra $600 in my checks every month. Just make sure u have a little cushion in case the calculator is wrong.

I've been using Taxcaster for a few years now and I'd say it's decent for a rough estimate but definitely not perfect. The biggest issue I've found is that it doesn't handle more complex tax situations very well - like if you have multiple income sources, itemized deductions, or any unusual circumstances. That said, a $10.5k refund does sound like you're significantly overwithholding! Even if Taxcaster is off by 20-30%, you're still probably getting way more back than you should be. I'd recommend starting conservatively - maybe adjust your withholdings to reduce your expected refund by half rather than trying to zero it out completely. That way you still get some extra money in your paychecks but have a safety buffer. Also, definitely double-check your inputs in Taxcaster and consider running the numbers through the IRS Withholding Calculator as well. Having two different estimates can help you feel more confident about making changes.