Would you recommend any specific free software for students? I tried TurboTax last year but ended up getting charged at the end when it turned out my "simple return" wasn't so simple because of my education credits.

I personally recommend FreeTaxUSA for students. Unlike TurboTax, they don't bait-and-switch you with unexpected charges for education credits or simple deductions. Federal filing is completely free, and state returns are only about $15 if you need them. The IRS Free File program is also good if your income is under $73,000. You can access various free options through the IRS website, and they're required to keep it truly free for qualifying taxpayers. Just be careful to access them through the official IRS.gov site rather than going directly to their websites, as that's how you ensure you get the truly free version.

But what about student loan interest? I have loans and heard that's deductible somewhere on the form.

Actually, I did start doing some consulting work on the side that brought in about $14k. I made quarterly estimated tax payments, but I'm wondering if I underestimated how much I needed to pay. How do you calculate the right amount for side income?

That side income is almost certainly a big contributor to your surprise tax bill! For side income, you generally need to pay: - Your regular income tax rate on the earnings (likely 22% or 24% at your income level) - Self-employment tax of 15.3% (this covers both employee and employer portions of Social Security and Medicare) So for $14k in consulting income, you'd need to set aside roughly 37-40% for taxes, which would be about $5,200 just from that side income. If your quarterly payments were significantly less than this, that could explain a big chunk of what you owe. Many people underestimate how much to set aside for self-employment income, especially the first year they have it. For next year, aim to set aside at least 35-40% of any consulting income for taxes, or use the IRS Form 1040-ES worksheet to calculate more precisely.

This happened to my spouse and me. Once I hit the Social Security cap around October, my paychecks got bigger but no additional tax was withheld to account for our combined income putting us in a higher bracket. It was like getting a raise but without proper tax withholding. Maybe check if that happened?

That's really interesting! Would students really know enough to handle self-employment questions though? My main concerns are around business deductions and depreciation.

The students themselves might be hit or miss on complex issues, but the supervising CPAs definitely know their stuff. I should've been clearer - the students do basic returns, but the professors oversee everything and handle the more complex questions like business deductions. When I went, I specifically mentioned I had self-employment questions, and they made sure the professor reviewed that part of my return. They actually found a home office deduction I had missed!

This is right but don't forget you have to attach a statement to your return saying you're making this election! I forgot last year and it was a headache.

Thanks for the advice! I did save my confirmation numbers from all three payments. Do you think I should call them now or wait for the online system to update after my last payment processes?

I would wait at least 14 days after your last payment for the system to update completely. If you still see a discrepancy after that, then call them with all your confirmation numbers ready. Most of these timing issues resolve themselves within two weeks. The IRS is notorious for sending out notices that are already outdated by the time you receive them. The online account is generally more current than any paper notice.

That's not actually good advice. Electronic payments through Direct Pay give you an immediate confirmation number and are generally credited to your account much faster than checks. The benefit of the postmark date only matters if you're cutting it close to a deadline.

Thanks for this suggestion! Do you know if the Free File Fillable Forms are user-friendly for someone who doesn't have much experience with tax forms? I'm a bit worried I'll mess something up if I try to do it all manually.

The interface is definitely not as user-friendly as TurboTax. It's basically just the actual tax forms in electronic format with minimal guidance. There are some basic calculations built in, but it won't walk you through what to enter or provide explanations like commercial tax software does. If you're including something straightforward like a single 1099-G, it might be manageable. You'd essentially be copying most information from your original return and just adding the additional income. The key is to take your time and double-check everything. The IRS instructions for Form 1040-X are actually pretty detailed if you follow them carefully.

Wait, are you saying some unemployment benefits might not be taxable for 2023? I thought that was only a 2020 thing during the height of COVID. Can you provide more details on this announcement?