That doesn't actually defer the taxes though - you still pay taxes on business income whether you take it out or not. The whole point is finding a way to legally postpone the tax liability.

This is really helpful - the Solo 401(k) option sounds promising for my situation. Quick question though: when you mention the income needs to be "structured as self-employment" rather than W-2, does that mean I need to receive a 1099 from the client? Or can I still set up a Solo 401(k) even if they want to treat me as a W-2 employee? I'm trying to figure out if I have any control over how the income gets classified.

Do you need receipts for literally everything? I'm terrible at keeping track of small purchases like parking fees when I go to professional workshops. Is there some minimum amount where receipts aren't required?

Technically, you should have documentation for all business expenses, but the IRS does have some practical thresholds. For expenses under $75 (except lodging), you might not always need a receipt, but you should still record the expense details in your records (date, amount, business purpose, etc.). For parking and transportation specifically, keep a log of dates, locations, purpose, and costs. Taking photos of parking receipts or using a dedicated business credit card can help track these smaller expenses without keeping paper receipts. I use a notes app on my phone to record small expenses immediately, which has saved me during tax time.

I used TurboTax Self-Employed last year and it handled my continuing education deductions fine. There's a section specifically for business expenses where you can categorize education costs. It asks questions to help determine if they qualify as business expenses. The software was pretty clear about the distinction between education that qualifies you for a new profession (not deductible as business expense) versus improving skills in your current business.

Thanks for sharing your experience! That's reassuring to hear. I think I'll go with TurboTax then since my situation isn't super complicated. Did it also help with tracking those additional expenses someone mentioned like books and supplies related to the courses?

That's a good point about matching the 1099-B exactly. I did make sure all my summary numbers match the totals on my 1099-B statements exactly, down to the penny. I triple-checked the proceeds, cost basis, and gain/loss amounts before submitting. Does TurboTax usually handle the summary entry correctly? I noticed they have separate fields for covered and non-covered securities, short-term and long-term transactions, etc. I just want to make sure I filled everything out properly.

TurboTax does handle the summary entry correctly as long as you put the right numbers in the right fields. The separation of covered/non-covered securities and short/long-term transactions is exactly what the IRS wants to see. Just make sure you're using the actual totals from the 1099-B summary page rather than adding up all the individual transactions yourself, as sometimes the broker's calculation methods might differ slightly from manual addition. Also double-check that you've properly categorized everything as short-term vs long-term based on holding period. If everything matches your 1099-B summary page, you should be good to go with no need to mail anything in.

Thanks for the info! My exchange (Coinbase) sent me a 1099-B this year with basis information included for most transactions. Sounds like I don't need to mail anything in after all. One more question though - for the few transactions where basis wasn't reported to the IRS (it says "basis not reported to IRS" on the form), should I be doing anything different with those?

For transactions where basis wasn't reported to the IRS, you'll need to report those on Form 8949 instead of using the summary method on Schedule D. Even though you don't need to mail anything in, you should keep detailed records of your purchase dates, amounts, and basis calculations for those specific transactions. The IRS requires more detailed reporting when basis isn't provided to them by the exchange. You can still e-file everything - just make sure those non-basis-reported transactions are properly documented on Form 8949 with the appropriate code in column (f) indicating that basis was not reported to the IRS. This is pretty common with crypto since exchanges only started providing comprehensive 1099-B forms recently. As long as your total volume is under $10M, no mailing is required, but having good records is crucial for the non-basis-reported transactions.

This is important advice. I work in payroll and see this all the time. Marriage penalty hits hardest when both spouses earn similar amounts above about $80k each. If one spouse earns significantly more than the other, you usually benefit from filing jointly.

For calculating both filing statuses, most tax software lets you compare married filing jointly vs married filing separately pretty easily. TurboTax, H&R Block, and FreeTaxUSA all have comparison features built in. You just enter all your info once and they'll show you the tax owed under both scenarios. If you're doing it manually or want a quick estimate, the IRS has worksheets in Publication 17 that can help you figure out which saves more. But honestly, with your income levels ($85k each), you'll probably want to run the full calculations since you're right in that marriage penalty zone where it could go either way depending on your deductions and other factors.

This is really helpful advice! I'm in a similar situation where I verified my identity about 10 days ago and have been anxiously checking my transcript daily. Based on what you and Andre mentioned about the 570/571 codes, I just checked my account transcript and I'm still showing code 570. Should I be concerned that it's been over a week, or is this still within the normal timeframe? Also, when you mention focusing on the account transcript vs return transcript, is there a specific reason the account transcript updates faster with these processing codes?