Has anyone used TurboTax for calculating these education credits? I'm trying to figure out if it automatically optimizes how scholarships are allocated or if I need to manually figure it out first and then enter it that way.

For anyone still confused about the allocation flexibility, here's a practical example that might help clarify things. Let's say you have $10,000 in scholarships and $15,000 in total college expenses broken down as: $8,000 tuition, $3,000 room/board, $2,000 books, and $2,000 personal expenses. Since only tuition and books ($10,000 total) are qualified expenses for AOTC, you could allocate your $10,000 scholarship to cover the $3,000 room/board + $2,000 personal expenses + $5,000 of tuition. This leaves you with $3,000 of tuition + $2,000 books = $5,000 in qualified expenses that you paid out-of-pocket, which you can then use for your AOTC calculation. The key insight is that you get to choose how to allocate unrestricted financial aid, and it's usually best to apply it to non-qualified expenses first to maximize your tax credits. Just remember that any scholarship money used for non-qualified expenses (like room/board) becomes taxable income to you - but for most students, the tax benefit from a larger education credit outweighs this.

One thing nobody's mentioned yet - make sure you're tracking your quarterly estimated tax payments for 2025! I got hit with an underpayment penalty my first year with affiliate income because I didn't realize I needed to make quarterly payments. Since you're not having taxes withheld from this income like you would with a regular job, the IRS expects you to pay as you earn throughout the year. If you wait until April 2026 to pay taxes on all your 2025 earnings, you could face penalties.

Just a tip that helped me with my small Etsy business income - keep a separate spreadsheet tracking ALL your income and expenses throughout the year. Update it monthly at minimum. PayPal's reporting is okay but not great for tax purposes. I export my PayPal activity every month to CSV, clean it up in Excel, and add it to my tracking spreadsheet. This makes tax time so much easier because I'm not scrambling to figure out what all these random deposits were from 10 months ago.

I went through something very similar last year with a temp agency! What really helped me was creating a simple spreadsheet to track everything while I sorted it out. I listed all three of my W-2s with the income amounts and withholding from each job, then used the tax tables in IRS Publication 15 to estimate roughly what I should owe. Turns out my other two jobs had withheld enough to cover most of what I owed on the temp agency income, so the final bill wasn't nearly as scary as I thought it would be. The key is to look at your total tax situation for the year, not just that one problematic W-2 in isolation. Also, when you do call the staffing agency again, ask specifically to speak with someone in payroll rather than just general customer service. Payroll departments usually understand these withholding issues better and can actually look up what happened with your W-4 processing. I found out mine had been entered as "exempt" due to a data entry error on their end. One more tip: if you end up owing money and can't pay it all at once, the IRS payment plan application is actually pretty straightforward online. The interest rate isn't great, but it beats stressing about a large lump sum payment.

I'm dealing with a very similar situation right now and wanted to share what I've learned so far. I had three jobs last year too, and one of my W-2s also has a completely blank Box 2. After reading through all these responses, I called my employer's payroll department directly (great advice from previous comments!) and found out exactly what happened. Turns out when I filled out my W-4, I accidentally wrote "Exempt" in the wrong box because the new form layout confused me coming from the old allowances system. The payroll person was actually really helpful and walked me through what I had submitted versus what I probably meant to submit. What's been helpful for me is using that IRS withholding calculator someone mentioned earlier to figure out what my withholding should have been. Then I compared that to what was actually withheld from my other two jobs. In my case, my other employers had overwitheld enough to mostly cover the gap, so I'm not looking at a huge tax bill. The key thing I learned is to not panic and get all your facts straight first. Pull all your paystubs, call the employer's payroll department, and calculate your total tax picture before assuming the worst. Most of the time these situations aren't as catastrophic as they seem at first glance. Also, definitely check your paystubs going forward at any new job - I wish I had caught this issue back when it was happening instead of discovering it at tax time!

Thanks everyone for the detailed explanations! This clears up so much confusion. I was definitely overthinking this - sounds like I just need to worry about regular income tax on my $14k in short-term gains, not FICA. Based on what you all said, I'm in the 22% tax bracket so I should probably set aside around $3k for federal taxes on those gains, plus whatever my state rate is. Way less stressful than thinking I'd owe an extra 15.3% on top of that! Really appreciate this community - you saved me from either overpaying or calling my accountant and paying $200 just to ask this one question.

Just want to add one more thing that might be helpful - even though short-term capital gains aren't subject to FICA taxes, they do count toward your adjusted gross income (AGI). This means they could potentially push you into a higher tax bracket or affect other tax benefits that have income limits. For example, if your gains push your AGI above certain thresholds, you might lose eligibility for things like IRA deduction limits, student loan interest deductions, or other credits. It's worth running the numbers to see how your total income picture looks, not just the tax on the gains themselves. Also, since you mentioned you're doing more day trading this year, keep really good records of all your transactions. The IRS has been cracking down on unreported trading activity, especially with all the new 1099 reporting requirements for crypto and stock transactions.

This is such a helpful thread for young creators! I'm actually in a very similar situation - been developing on Roblox for about two years and have around $35k worth of Robux saved up. Reading through everyone's experiences has been incredibly reassuring. One thing I wanted to add that I learned recently - if you're planning to continue game development as your main income source, you might want to look into getting an Employer Identification Number (EIN) from the IRS even as a sole proprietor. It's free to get directly from the IRS website, and having an EIN can make you look more professional when opening business accounts or working with contractors later on. Also, I've been using a simple expense tracking app called Expensify to photograph and categorize receipts for anything business-related. It automatically pulls data from receipts and makes it super easy to organize everything for tax time. Way better than the shoebox full of paper receipts I had my first year! For anyone else in this situation - definitely start tracking everything NOW like others have mentioned. I wish I had been more organized from the beginning. And don't stress too much - the IRS wants you to succeed as a young entrepreneur, they just want accurate reporting. Thanks to everyone who shared their experiences, especially the tax professionals who took time to give detailed advice. This community is awesome!

This thread has been incredibly comprehensive! As someone who's worked in tax preparation for several years, I'm really impressed with the quality of advice being shared here. One additional resource I'd recommend checking out is the IRS's own guidance for the "gig economy" - they have a specific section on their website about digital platform earnings that covers situations exactly like yours. It's Publication 334 (Tax Guide for Small Business) and they recently updated it to include more examples of online creator income. Also, since you mentioned your parents are only familiar with W-2s, you might want to show them IRS Form 1040-ES (Estimated Tax for Individuals) so they understand what quarterly payments look like. Sometimes seeing the actual forms helps parents feel more comfortable with the self-employment process. One thing I always tell young creators - your situation is becoming incredibly common. The IRS has seen a huge increase in digital creator filings over the past few years, so you're definitely not breaking new ground here. They have plenty of experience with Roblox, YouTube, Twitch, and other platform earnings. The fact that you're planning ahead and asking these questions puts you way ahead of most people your age. Keep that organized mindset and you'll do great! The creator economy is only going to keep growing, so learning proper tax management early is a huge advantage for your future.