Has anyone tried using the simplified home office deduction ($5 per square foot up to 300 sq ft) vs itemizing all home expenses? I'm trying to figure out which would be better for my clothing reselling business... I use about 150 sq ft for inventory storage and photography.

For your situation with $11,500 in sales and $6,700 in expenses, you're definitely on the right track with Schedule C as a sole proprietor. That puts you at about $4,800 in profit, which means you'll owe self-employment tax on that amount (about $679). A few specific tips for clothing resellers: - You can absolutely keep purchasing receipts together rather than matching each item individually. The IRS cares about your total Cost of Goods Sold, not item-by-item tracking. - Don't forget to deduct platform fees (eBay, Poshmark, etc.), shipping supplies, storage containers, and even a portion of your internet bill if you use it for business. - Consider opening a separate business checking account - it makes tracking so much easier and looks more professional if you ever get audited. At your current profit level, sole proprietorship is definitely the most cost-effective structure. The extra complexity and costs of an LLC or S-corp wouldn't be worth it until you're making significantly more profit. Keep good records and you'll be fine!

Has anyone else noticed that retroactive pay adjustments almost never work out in the employer's favor? lol. I've received 3 retro adjustments in my career and all were because they underpaid me. Never once has a company said "oops we overpaid you, here's a negative adjustment." 🤔

I had a similar situation a few years ago when my company implemented a new payroll system and discovered they hadn't been applying my shift differential correctly for almost 8 months. The "Retro Tax" line is exactly what you described - it's the tax withholding on the back pay they owed your wife. One thing to keep in mind is that retroactive payments are sometimes subject to supplemental tax withholding rates, which can be higher than regular payroll withholding (often 22% federal). This means they might have actually over-withheld taxes on this payment, which would result in a larger refund when you file your return next year. I'd suggest keeping a copy of this paystub with your tax documents since it shows the breakdown clearly. The fact that her promotion was 4 months ago and this adjustment just appeared suggests their payroll department finally caught the error and corrected it. This is definitely money she earned and deserves to keep!

As someone who works in tax compliance, I want to reassure you that you're handling this situation perfectly. The fact that you discovered the mistake within just two months and immediately corrected it shows exactly the kind of good faith effort the IRS looks for. Here's the reality: the IRS processes millions of tax returns and deals with withholding adjustments constantly. Your situation - a new immigrant accidentally checking exempt and then quickly fixing it - is far more common than you might think. The penalties everyone worries about are really designed for people who persistently under-withhold or try to game the system. Since you've already submitted the corrected W4, my advice would be to calculate roughly what you should have had withheld (probably around $2,200-2,800 for those two months at your salary level) and then choose whichever catch-up method feels most comfortable: either increase your withholding for the rest of the year or make an estimated payment by the September 16th deadline. The most important thing is that by year-end, your total tax payments (withholding + any estimated payments) should cover at least 90% of what you'll owe. Given that you caught this in June, you have plenty of time to get there. Try not to let the anxiety consume you - you're doing everything right!

I'm a tax preparer and see this situation frequently, especially with new immigrants. The good news is that you've handled this exactly right by catching it early and immediately correcting your W4. Two months of missed withholding is very manageable compared to discovering this in December! Here's my practical advice: since you earn about $6,300 monthly, you probably should have had roughly $1,100-1,400 withheld per month for federal taxes. So you're looking at about $2,200-2,800 in missed withholding total. I'd recommend the increased withholding approach rather than estimated payments - it's simpler and ensures you don't miss any deadlines. Ask your HR to withhold an additional $230-280 per paycheck for the rest of the year (assuming you have about 12 paychecks left). This spreads the catch-up amount evenly and gets you back on track. The IRS understands that new employees make W4 mistakes. What matters is your total tax paid by year-end, not the month-to-month timing. Since you corrected this promptly and are taking steps to catch up, you're very unlikely to face any penalties. Keep documentation of when you discovered the error and submitted the corrected W4 - this shows good faith compliance. You're doing everything right, so try not to stress too much about this!

Quick tip: save EVERYTHING. Not just receipts but also: - Emails about assignments related to the festival - Published articles you wrote based on festival attendance - Business cards from contacts you made - Festival program with notes on screenings you attended for work - Photos of you working (conducting interviews, etc) I got audited 2 yrs ago for exactly these kinds of deductions and having this documentation saved me thousands!!! The IRS agent specifically mentioned how impressed they were with my record keeping.

Great question! I've been doing freelance entertainment journalism for about 5 years now and have deducted similar festival expenses. The key is proving legitimate business purpose - which it sounds like you definitely have. One thing I'd add to the excellent advice already given: consider getting assignments lined up BEFORE you go if possible. Having pre-arranged assignments or contracts with your publication partners creates much stronger documentation than just "I'll write about whatever I see." Even informal email confirmations work. Also, track your time carefully. I use a simple spreadsheet noting which screenings were for work vs personal enjoyment, interview times, writing sessions, etc. This helps with the allocation everyone mentioned and shows the IRS you're taking the business aspect seriously. The amounts you mentioned ($2500 pass, $800 flights, $1800 hotel) seem totally reasonable for Tribeca, especially if this generates significant income for you. Just make sure you can show a pattern of earning from this type of work - the IRS gets suspicious if someone claims huge deductions but minimal related income. One last tip: if you're interviewing filmmakers, try to schedule those during off-peak hours when possible. Having business meetings during "work hours" vs only attending evening screenings helps establish the professional nature of your trip.

Does anyone know if its better to max out HSA first or 401k? I have both W2 and 1099 income too and trying to figure out the optimal order.

Great question! I'm in a similar boat with mixed income sources. One thing I learned the hard way - make sure you calculate your net self-employment income correctly for that 20% employer contribution. Don't forget to subtract: 1. Half of your self-employment tax (roughly 7.65% of your net SE income) 2. The employer contribution itself (it's a circular calculation) So if you have $130k in 1099 income, after business deductions and the SE tax adjustment, your actual contribution base will be lower. The effective rate usually works out to about 18.6% rather than the full 20%. Also, since you mentioned backdoor Roth - consider whether a solo 401k with Roth options might be better than trying to do backdoor Roth IRA conversions, especially if your income puts you over the IRA contribution phase-out limits. The solo 401k gives you more flexibility and higher contribution limits.