


Ask the community...
Don't make the mistake I made! I paid our nanny as an independent contractor for almost 2 years because she asked for it that way. Got audited last year and ended up owing over $3,400 in back taxes, penalties, and interest. The IRS agent specifically said nannies who work in your home and follow your schedule almost never qualify as independent contractors. If your nanny is pushing for contractor status, it's usually because they want to avoid paying their portion of FICA taxes. But you as the employer will be the one who gets hammered if you misclassify them.
That sounds really scary! But what if both people agree to the arrangement? Like if we both sign a contract saying she's an independent contractor, wouldn't that protect me?
Unfortunately no, a contract doesn't override IRS classification rules. I actually had a written agreement with my nanny stating she was an independent contractor, and the IRS basically said that document wasn't worth the paper it was printed on. The classification is determined by the actual working relationship, not what you call it in a contract. Since I controlled when and how she worked, provided all the equipment/supplies, and she only worked for our family, the IRS said she was clearly an employee regardless of what we agreed to between ourselves.
Has anyone used a nanny payroll service? I'm thinking of signing up for one to handle all this tax stuff. Seems like it might be worth the money for peace of mind.
Don't forget to check if you need to file a FBAR (FinCEN Form 114) if you had foreign bank accounts! If the aggregate value of all your foreign accounts exceeded $10,000 at any point during the calendar year, you need to report them. This is separate from your tax return and has hefty penalties if you don't file. Also, depending on your specific situation, you might need to file Form 8938 (Statement of Specified Foreign Financial Assets) if your foreign assets exceed certain thresholds. The thresholds for Form 8938 are higher than for FBAR and depend on your filing status and whether you live in the US or abroad.
Oh no, I didn't even think about reporting my Japanese bank accounts! I had about $15,000 in my account before I moved everything to the US. Is there a deadline for filing this FBAR form? Is it the same as the tax return deadline?
The FBAR deadline is April 15, but it automatically gets extended to October 15 if you miss the April deadline. You don't need to request the extension specifically for the FBAR. The form is filed electronically through the Financial Crimes Enforcement Network's BSA E-Filing System, not with your tax return. It's fairly straightforward - you just need to provide information about each account, including the maximum value during the year, account number, and the financial institution's information.
One word of caution from someone who's been through this: if you're planning to claim the Foreign Tax Credit, be prepared for potential delays in your refund. When I filed with Form 1116 (Foreign Tax Credit) for the first time, my return got flagged for review and my refund was delayed by almost 3 months. Not saying this will happen to everyone, but international tax situations do tend to get more scrutiny. Make sure you have all your documentation organized and ready in case they request additional information.
For self-employment income, I actually recommend checking out FreeTaxUSA. I've used it for the past 4 years with my consulting business and it handles Schedule C perfectly well. The federal return is free and state is only like $15. TurboTax wanted to charge me $170 for basically the same thing! The interface isn't quite as slick as TurboTax, but it's totally functional and asks all the right questions about business expenses, home office, etc. Plus they have decent customer support if you get stuck on something.
Does FreeTaxUSA handle multiple 1099s well? I have like 8 different clients who sent me 1099-NECs this year.
Absolutely! I had 12 different 1099-NECs last year and FreeTaxUSA handled them with no problem. You can enter them all individually or combine them on your Schedule C - it gives you both options. The software also lets you categorize different types of income if you have multiple business activities, which was really helpful for me since I do both consulting and some product sales.
has anyone compared the accuracy between different software options? i did a test last year where i input identical info into turbotax and hr block and got different refund amounts which freaked me out!!! eventually figured out hr block missed a self employment deduction that turbotax caught.
Another option would be to make your "regular" commute officially part of your podcast business. Like, you could rebrand your show to specifically review your commute route businesses and traffic patterns daily. Then your commute becomes the actual content creation time and location for your business. My brother-in-law did something similar with his photography business where he specifically focused on documenting his daily train commute and now sells prints. The IRS has never questioned his deductions since the commute literally IS his business.
Is this actually legit though? Seems like you're just trying to find a loophole that would get flagged in an audit. Can you really just "decide" your commute is now your business?
It's not about "deciding" your commute is your business - it's about actually establishing a legitimate business purpose that happens to use your commute route. My brother-in-law's commute photography project generates actual income through print sales, and he has documentation showing the business purpose of each trip. You'd need to be able to show that your podcast is truly focused on your commute route specifically, with actual content about locations along that route, and that you're consistently creating content during those drives. You also need real income from it. The IRS looks at whether there's a profit motive and if the activity is carried out in a businesslike manner. It's not a loophole if it's actually a legitimate business activity.
Don't forget that if you use the standard mileage rate (which most people should), you can't also deduct individual car expenses like gas, insurance, maintenance, etc. The standard rate (62.5 cents per mile for 2025) is supposed to cover all those costs. But if your car is expensive to operate, you might want to calculate actual expenses instead. Just keep ALL receipts and determine the percentage of business use vs personal use. And whichever method you choose in the first year you use the car for business, you're pretty much locked into for the life of that vehicle!
One other thing to consider is that you'll need to fill out a Schedule C for your podcast income, which means you'll pay self-employment tax on that income (about 15.3%). So make sure your deductions are actually saving you more than you're paying in SE tax if this is a small side hustle.
Yara Khalil
Another thing worth mentioning is that overtime might push you into a higher Medicare Additional Tax bracket if you're getting close to $200k income. I hit this last year and was shocked when filing taxes. Any income over $200k gets an additional 0.9% Medicare tax on top of everything else. So if your regular job pays $190k and you do $15k in overtime, the extra $5k over the threshold gets that additional tax. Not a huge percentage but still something to be aware of if you're in that income range.
0 coins
Keisha Brown
ā¢Is this something that employers automatically withhold or is it something you have to pay at tax time? I'm getting close to that range with all my overtime this year.
0 coins
Yara Khalil
ā¢Employers are supposed to automatically withhold the Additional Medicare Tax once your wages exceed $200k for the year. However, there's a quirk: if you have multiple jobs or your spouse works and you file jointly, your combined income might exceed the threshold even if no single employer pays you over $200k. In that case, your employers won't withhold the extra 0.9%, and you'll need to either make estimated tax payments or be prepared to pay it when you file. You can also request additional withholding on your W-4 to cover it. It caught me by surprise because I had two jobs last year that together put me over the threshold.
0 coins
Paolo Esposito
Something nobody has mentioned yet - check if your overtime is pushing you into a higher state tax bracket too! Federal isn't the only concern. In my state, the jump from 6% to 9% state tax hit me hard when I was working tons of OT last summer.
0 coins
Amina Toure
ā¢This is really important. I live in California and the state brackets have even more dramatic jumps than federal. My overtime last year pushed me from 8% to 9.3% state tax bracket and it definitely took a bite out of those extra earnings.
0 coins