Thanks for this advice. Is filing Form 7004 for an extension still helpful even though I've already missed the original March deadline? And do you know if first-time penalty abatement is something I can request myself or do I need a tax professional to help with that?

Yes, filing Form 7004 is still helpful even after missing the deadline! It prevents additional penalties from accruing after the original due date. So while you'll still owe penalties for the period between March 15 and when you file the extension, you won't accumulate more penalties through September. First-time penalty abatement is something you can absolutely request yourself - you don't need a professional. After you file the late return, call the IRS business line and simply ask for "first-time penalty abatement." If you have a clean compliance history (no penalties in the past 3 years), they will often grant it over the phone. Just be polite and explain that you weren't aware of the filing requirements since this was your first year with actual business activity.

That's not entirely accurate. S-Corps save on SE taxes but they have more compliance requirements like payroll tax filings and reasonable salary documentation. Plus the OP would need to file Form 2553 to elect S-Corp status, and retroactive elections can be tricky. Not worth the headache for a small LLC that's just starting out in my opinion.

That's really helpful! But what if I didn't pay any taxes last year because I was a student and didn't have income? Does that mean I don't have to pay anything for this year's quarterly taxes, or am I misunderstanding the safe harbor rule?

If you didn't have any tax liability last year, then technically 100% of last year's tax would be $0. However, in this situation, you'd need to use the other safe harbor provision of paying 90% of what you'll owe this year. Since this is your first year with self-employment income, you do need to make estimated quarterly payments. But the good news is that with your relatively low income level around $6,800, your total tax obligation won't be very high. You might actually qualify for certain deductions and credits that could significantly reduce what you owe.

Your clients should send you a 1099-NEC form (for Non-Employee Compensation) if they paid you $600 or more during the year. You don't create these yourself. However, whether you receive 1099s or not, you're still required to report all your income and pay quarterly taxes on it. The 1099s are basically just documentation of what you earned, but you should be keeping track of all your income regardless of whether you get these forms. For calculating quarterly taxes, you'll estimate your annual income and tax liability based on your earnings, then divide by 4 to determine your quarterly payments.

Just checked and my filing status is the same on both (Head of Household), and I triple-checked the SSNs for my kids. They did live with me full-time last year. I'm starting to think there's something weird in how TurboTax is handling the child tax credit questions. Maybe I'll try re-entering that section from scratch. Has anyone else noticed TurboTax getting less user-friendly over the years? I feel like their interview process used to be clearer.

TurboTax definitely has become more confusing in recent years. Their interview process now seems designed to push you toward paid add-ons rather than clearly explaining tax situations. For the Child Tax Credit specifically, look for questions about your children's relationship to you, whether anyone else could claim them as dependents, and their residency. Sometimes these questions are tucked away in sub-menus or worded in confusing ways. If you're certain they qualify (under 17, lived with you over half the year, you provide over half their support), then FreeTaxUSA is likely calculating correctly.

That's a great suggestion, thank you! I just downloaded the PDF of both returns and compared those specific lines. You were right - TurboTax shows $0 on Line 12 and Line 28, while FreeTaxUSA shows $1,400 on Line 12 and $600 on Line 28. Schedule 8812 is completely different between the two returns. Looks like I need to figure out why TurboTax isn't calculating my Child Tax Credit at all. Going to go back through all the dependent questions tonight!

That's an interesting idea I hadn't thought of. Since her business is a sole proprietorship, would that even work? Wouldn't it still trigger a taxable event since it's essentially transferring to her personally?

You're right that with a sole proprietorship it gets tricky since there's no legal separation between the business and the owner. If you formed an LLC or S-Corp first, you might have more options, but that introduces other complexities. One option might be to explore using the stock as collateral for a business loan to purchase the property instead of selling it outright. This way you keep the stock, avoid the capital gains for now, and can deduct the interest payments. The downside is you'd have ongoing debt, but if the stock continues to appreciate, it might be worth it long-term.

Commercial real estate is still depreciated over 39 years under straight-line depreciation. The recent changes mainly affected Section 179 expensing and bonus depreciation for personal property and qualified improvement property, not the building itself. For a sole proprietorship purchasing a commercial building, you'd still report the depreciation on Form 4562 and Schedule C. The property's purchase price (minus the value of the land, which can't be depreciated) determines your annual depreciation deduction.

Omg I didn't even think about that possibility! Just double-checked my return and thankfully the bank info looks right. Good looking out - that would've been such a headache to deal with!

That's great you caught it in time! Another tip since it's your first time filing - save a PDF copy of your completed tax return somewhere safe. You'll often need info from previous year returns when filing next year, and it's super annoying to not have it handy.

I've had multi-state returns for years and state refunds are wildly inconsistent. Some states are quick (like 5-7 days) while others can take 2+ months. Idaho is notoriously slow in my experience. They were still using paper processing for a lot of their internal systems last I checked.