Don't forget withholding! Even though others are right about marginal tax rates, your employer might withhold taxes on the lump sum at a higher rate. The IRS has special withholding rules for large one-time payments. When I got my severance, they withheld like 30% even though my actual tax rate was lower. I got the extra back when I filed my return, but was strapped for cash for months waiting for that refund.

Just wanted to add another perspective here - I went through this exact situation about 6 months ago. Like you, I was terrified about the tax implications of a lump sum severance. After doing a ton of research (and using some of the tools others mentioned), I realized the tax bracket fear was mostly unfounded due to how marginal rates work. But what really helped me decide was thinking about the time value of money and my personal financial situation. I ended up taking the lump sum because: 1) I could immediately max out my 401k and IRA contributions to reduce the taxable amount, 2) I had high-interest debt I could pay off right away, and 3) I wanted the certainty of having the money rather than risking the company having financial problems later. The peace of mind was worth more to me than the small tax difference. Plus, having that cash cushion made my job search way less stressful - I could be pickier about opportunities instead of taking the first thing that came along. Everyone's situation is different, but don't let tax bracket misconceptions drive your decision. Focus on what makes sense for your overall financial picture and job search timeline.

One other thing to consider - depending on your state, you might be able to get some state tax relief even if you can't lower your federal bracket. Some states have more generous deductions or lower rates for certain types of income. What state are you in?

I'm dealing with a very similar situation after receiving a large severance earlier this year. One strategy that worked well for me was timing my year-end bonus deferral at my new job - if your employer offers this option, you might be able to defer some of your December income to next year. Also, don't forget about the potential for increasing your state tax withholding if you're in a state with income tax. While it won't change your federal bracket, making sure you're not hit with additional state penalties can help your overall tax situation. Have you looked into whether you can contribute to a SEP-IRA if you did any freelance or consulting work during your unemployment period? Even small amounts of self-employment income can open up significantly higher contribution limits than traditional IRAs. The key is to act quickly since we're getting close to year-end. Many of these strategies need to be implemented before December 31st to count for this tax year.

Don't forget about getting properly registered with the IRS as a tax preparer! You'll need a PTIN (Preparer Tax Identification Number) before you can legally sign returns as a paid preparer. It only costs about $35 and can be done online through the IRS website. Without this, you can't legally charge for tax preparation services.

As someone who's been doing tax prep for several years now, I'd strongly recommend starting with an established firm for your first season. The learning curve is steep, and having experienced preparers around to answer questions is invaluable. You'll also get exposure to professional-grade software and a steady flow of clients without having to market yourself. That said, don't underestimate the demand for competent preparers. While DIY software has captured some market share, many people still prefer having a real person review their taxes, especially when they have life changes, small business income, or just want peace of mind. The key is positioning yourself as more knowledgeable than the typical seasonal preparer - your accounting education gives you a real advantage here. For building your own practice later, start documenting everything you learn about client acquisition, common issues, and efficient workflows. This knowledge will be gold when you eventually branch out on your own. Also consider specializing in a particular area (like small businesses or rental properties) rather than trying to be everything to everyone.

Im confused about all the credits cuz theres so many. Is american opportunity better than lifetime learning? And which form do you fill out to get these? My dad pays my community college but im not sure if i can get any money back on taxes.

Just want to add another perspective here - I'm a CPA and see this situation frequently. The key thing to remember is that education tax benefits follow the person who receives the 1098-T, not necessarily who paid the expenses. Since you're clearly not your mom's dependent (being in your 30s, earning income, paying your own living expenses), you have the right to claim the credits. One thing I'd recommend is documenting your financial independence clearly - keep records showing you pay more than half your own support costs excluding the tuition. This includes rent, food, transportation, medical expenses, etc. If the IRS ever questions your dependent status, you'll have the documentation ready. Also, make sure to check the income limits for the credits. The American Opportunity Credit phases out between $80,000-$90,000 for single filers, and Lifetime Learning phases out between $59,000-$69,000. At $45k income, you're well within both ranges, so you should be able to claim whichever credit applies to your situation.

You might want to look into getting insurance if your making this a regular thing. Better safe than sorry!

Great question! Just to add to what Lorenzo said - you'll also want to track your hours worked since the IRS may ask about your hourly rate if audited. Also consider if any of the families paid you over $600 total for the year - they technically should have issued you a 1099-NEC but many don't know this rule. Don't let that stop you from reporting the income though! The IRS gets copies of all 1099s so they'll know if you received any official forms.