Thank you for this practical advice! Quick question - for the payment estimate, would you recommend just using last year's total tax amount as a starting point? And for the first-time penalty abatement, is that something I request when I file or after I receive a penalty notice?

Last year's total tax is definitely a good starting point. If you know your income increased, add 25-30% to be safe. It's always better to slightly overpay and get a refund than underpay and face more penalties. For First Time Penalty Abatement, you can request it either way. Some tax pros recommend waiting for the penalty notice before requesting abatement, but I found it helpful to include a letter with my late return specifically requesting it based on my clean compliance history. I used IRS guidance from their website about FTA requirements and referenced it in my letter. You can also call after filing to request it, but having it documented in writing from the start worked well in my case.

This! I learned this lesson the hard way. Got all my filing extension stuff sorted only to get hit with a separate underpayment penalty for not making proper quarterly estimated payments. It was like solving one problem just to discover another one.

Is there a way to check if my withholding is correct on my pay stubs? And what form do I need to file for those quarterly payments? This is all so confusing!

You can check your pay stub - it should show federal income tax withholding, Social Security, and Medicare. Compare several pay periods to see if the withholding is consistent. If it seems too low (less than 10% of your gross pay for federal taxes if you're single), you might need to adjust your W-4. For quarterly estimated taxes, you'll use Form 1040-ES. It's pretty straightforward - you estimate your total tax liability for the year, divide by 4, and make payments by the quarterly due dates (April 15, June 15, September 15, and January 15 of the following year). You can pay online through the IRS Direct Pay system. If your income is irregular, you can use the "annualized income" method that lets you pay as you earn rather than equal payments.

The Earned Income Credit usually requires you to have kids. I'm single with no kids and make about what OP makes, and I've never qualified. But definitely check for education credits if you took any classes!

Oh wow, I didn't realize that! So if I take Section 179 on my equipment now, but sell it in a couple years to upgrade, I'll have to pay some tax on that sale? Is there a way to calculate how much that would be?

Yes, it's called depreciation recapture. Basically, you'll pay taxes on the difference between the depreciated value (which would be very low since you took Section 179) and what you sell it for. For example, if you deducted $3,800 for equipment using Section 179, then sell it two years later for $2,000, you'd report that $2,000 as income. If you had used regular depreciation instead, you would have only reported the difference between the sale price and remaining book value as income. There's no simple calculation because it depends on your specific situation, but your tax software should handle it when you report the sale.

Yes, there are special rules for vehicles! If your truck is truly over 6,000 lbs GVWR (gross vehicle weight rating - check the driver's side door jamb), it qualifies for the full Section 179 deduction if used more than 50% for business. Vehicles under 6,000 lbs face much stricter limits - only around $19,200 for 2025 tax year. So those heavier trucks and SUVs get much better tax treatment, which is why you see so many business owners driving larger vehicles.

Did you have to file an amended return or did they just request the verification and then process your original return once they had the correct information?

I didn't have to file an amended return. The IRS just sent a notice requesting verification documentation, and once I provided copies of my son's social security card and birth certificate, they continued processing my original return with the correct information. They actually handled it pretty efficiently once I sent in the documents. I just had to wait about 6 weeks longer for my refund than I would have normally. The key was responding to their notice immediately - I've heard horror stories from people who ignored those letters and had much bigger headaches later.

I noticed you mentioned being a volunteer tax preparer. I'm curious, in cases where the first 4 letters don't match exactly but the name is still recognizably similar (like Davis/Davus), what's the approximate percentage of cases that end up requiring amendment vs. just proceeding normally?

Thanks for mentioning the other requirements! I've been so focused on the income limits I forgot about vehicle price caps. Do you know if the $25,000 limit is before or after any dealer add-ons and fees?

The $25,000 limit is based on the sales price of the vehicle itself, before taxes and fees. However, dealer add-ons that are included in the purchase price (like extended warranties sold by the dealer) would count toward that limit. Be careful about dealers who might try to structure the deal in ways that artificially lower the vehicle price while adding "mandatory" add-ons to get around the price cap. The IRS looks at the actual purchase price of the vehicle as reported on your sales documentation.

this isnt correct, i got the ev credit last year and still claim mileage. my tax guy said its fine cause the credit is for buying the car, deductions are for using it. totally different things.