That's actually really helpful to know about the safe harbor rule! So if I just take my 2022 total tax and divide by 4, I'm completely covered for this year? Even if I'm making significantly more this year than last year?

If your income for 2022 was below $150,000 (AGI), then yes, paying 100% of your 2022 tax spread across your four quarterly payments will fully protect you from underpayment penalties regardless of how much more you earn this year. If your 2022 AGI was over $150,000, you'll need to pay 110% of your 2022 tax to qualify for the safe harbor. It's a really useful rule when your income fluctuates or increases, especially for self-employed folks who might not know their exact income until the year ends.

Totally agree! And the instructions are written in the most confusing way possible. I'm convinced they do it on purpose so we mess up and they can charge penalties. I spent 3 hours just trying to figure out my first quarterly payment.

Thanks for bringing this up. The distribution code is definitely "1" for early withdrawal. And I never made after-tax contributions to this 401k - it was all traditional pre-tax money through my employer. I understand the 10% early withdrawal penalty gets calculated on my tax return, but I'm certain the federal and state income tax withholding should show up on the 1099-R. When I requested the distribution, Fidelity's system specifically asked how much I wanted withheld for federal and state taxes, and I selected the percentages. That withholding definitely happened because the amount deposited to my bank was significantly less than the gross distribution.

You're absolutely right - if you elected to have federal and state taxes withheld during the distribution process, those amounts should definitely be reflected on the 1099-R in boxes 4 and 14 respectively. Since you're certain withholding occurred and have bank statements to prove the net amount received, I'd recommend escalating this at Fidelity. Ask specifically for their tax reporting department rather than general customer service. You might also request to speak with a supervisor if the first person isn't being helpful.

This happened to me too! My 401k company sent TWO different 1099-Rs for the same distribution - one showing the gross amount and a separate one showing the withholding. Made absolutely no sense but that's how they did it. Definitely check if there's another form coming.

Can you still share access with your accountant in Quicken? That's one of the main features I use in QBO.

There's no direct accountant access like QBO offers. What I do instead is export tax reports as PDFs or Excel files and share those with my accountant quarterly. It's a bit more manual, but it works fine since my business is pretty straightforward. My accountant actually prefers getting my organized spreadsheets rather than digging through QBO themselves. But if your accountant is actively working in your books throughout the year, this might be a limitation for you.

I tried Wave but found the reporting really limited compared to QBO. Also had some issues with bank connections frequently breaking. It's decent for very basic needs though.

That's fair. I've had occasional bank connection issues too, but for a free option it's been reliable enough. The reporting has gotten better in recent updates, but definitely still not as comprehensive as QBO. For my small photography business it hits the sweet spot of "good enough" without any monthly fees.

Thanks for the tips! You know, I did receive a year-end bonus of around $2,000 that was taxed differently than my regular paychecks. Could that be part of the issue? Also, I have a high-yield savings account that earned about $800 in interest last year.

Yes, both of those things definitely contributed to your situation! Bonuses are typically withheld at a flat 22% supplemental rate, which might not be enough if you're in a higher tax bracket. And the $800 in interest income has no withholding at all, so you'll owe taxes on that amount when you file. For next year, you have two options to avoid owing: increase your regular withholding by submitting a new W-4 with additional withholding on line 4(c), or make estimated quarterly tax payments for your interest income. For someone in your situation, adding about $30-40 in additional withholding per paycheck would likely cover these extra income sources.

every time i use that irs withholding calculator thing i get different results lol. one time it said i should get an extra $50 taken out each check, then the next time it said i should get like $20 back each check. makes no sense

What about aggressive interpretations of gray areas though? Like if the law isn't super clear about something and you take a position that benefits you tax-wise, but there's a decent chance the IRS would disagree?

That's where the concept of "substantial authority" comes into play. If you're taking a position in a gray area, the question becomes whether you have a reasonable basis for your interpretation. Tax professionals typically look for about a 40% chance of prevailing if challenged to consider there being "substantial authority" for a position. If you're taking an aggressive but supportable position, the key is proper disclosure. By filling out Form 8275 (Disclosure Statement) with your return, you're telling the IRS "here's my position on this gray area" rather than hoping they don't notice. This disclosure protects you from accuracy-related penalties even if the IRS ultimately disagrees with your interpretation. It separates aggressive-but-legitimate planning from attempting to hide something.

Not reporting cash income is pretty clearly fraud, not strategy. The IRS definition of fraud includes "intentional wrongdoing with the specific intent to evade a tax known to be due." If you received income, it's taxable regardless of payment method. Pretty much any tax professional would tell you that deliberately not reporting income crosses the line from strategy into fraud. Legitimate strategy would be looking at whether that income qualifies for any deductions or credits, or considering ways to offset it with business expenses if it's self-employment income.