That's an interesting approach I hadn't considered! About how much do you typically underwithhold? And do you just make equal quarterly payments, or is there some calculation involved? I'm intrigued by the idea of having more control over our money throughout the year.

We typically underwithhold by about 15% of our total expected tax liability. For someone in your situation, that might mean underwithholding by around $30,000 total for the year, or $2,500 monthly that stays in your accounts instead of going to the IRS. The quarterly payments don't have to be equal if your income fluctuates, but we keep it simple and just divide our expected shortfall by 4. The payment due dates are April 15, June 15, September 15, and January 15 of the following year. You can make them online at the IRS website using Direct Pay or EFTPS. Just make sure you're meeting that safe harbor of 110% of your previous year's tax liability (since you're over the $150k AGI threshold). That's the easiest way to guarantee no penalties regardless of this year's actual liability.

I use it all the time and find it really accurate, but it's crucial that you include ALL income sources, not just your W-2 jobs. Make sure you're entering things like investment income, rental properties, etc. The other key is to update it quarterly since your situation might change throughout the year.

Thanks for sharing your experience. Do you remember how long the amended return process took? And did you face any penalties from the IRS?

The amended return took about 16 weeks to process from when I mailed it - this was last year when they still had significant backlogs. They've supposedly improved processing times since then, but plan for at least 8-12 weeks. For paper returns, it's always slower. I didn't end up facing any penalties because I included a letter explaining that I received the 1099-DIV after the filing deadline. I did have to pay a small amount of interest on the additional tax (about $3 for a $200 tax difference), but the IRS waived the late payment penalty after I explained the situation. Make sure you include a clear explanation with your amendment!

I actually did! I sent an email to the company's finance department explaining the situation and included an invoice for the $120 I paid H&R Block to amend my return. They sent me a check about a month later with an apology letter. I was shocked it worked!

Do you happen to know if crypto transactions are on a different timeline? I did some ETH trading on Robinhood and wondering if those forms come separately.

From what I understand, crypto should be included on your 1099-B if you sold any during the year. Mine had both my stock trades and my small amount of Bitcoin trading all on the same form. I don't think they issue separate forms for crypto versus stocks, but the forms might come later if you did a lot of crypto trading since those transactions can be more complex to report.

I had over 300 trades and got mine yesterday. Check if you did any weird stuff like options or penny stocks. My buddy trades options and hasn't gotten his forms yet, while I mostly stuck to regular stocks and ETFs.

Thanks for the info. I did mess around with some options trading last summer, so maybe that's what's causing the delay. Guess I'll just have to tell my tax guy to wait. So frustrating!

Do you remember what the monthly payment amount was for your $5,800 balance? I'm trying to figure out if they let you choose how much to pay each month or if they assign an amount.

You generally can choose your monthly payment amount as long as the debt will be paid off within the required timeframe. For amounts under $10,000, that timeframe is 3 years (36 months). So in my case, the minimum payment would have been about $161 per month not including interest and penalties. I actually opted to pay $200 per month to account for the ongoing interest and penalties and to clear the debt faster. They let me choose this amount during the application process. I set up direct debit from my checking account to avoid having to remember to make the payments and to get the lowest setup fee.

Completely agree about filing on time! The failure-to-file penalty is 5% of the unpaid taxes for each month your return is late, up to 25%. The failure-to-pay penalty is much lower at 0.5% per month.

Thank you for pointing this out! He did file on time, he just couldn't pay the full amount at once. I'll definitely suggest he try the online system since that seems to be the consensus here - much easier than trying to call again.

12 Thanks for the suggestion! Would I need any special documentation to prove I actually tried to collect the debt? I have the original contract, all my invoices, and email threads showing I tried to get paid multiple times.

4 Yes, documentation is critical. Keep your original contract, all invoices sent, and especially any communications showing you attempted to collect payment. Also document how you determined the company was bankrupt and the debt uncollectible - like news articles about their shutdown, bankruptcy filings, or bounced emails to company addresses. Form 8949 is typically used for capital losses, but business bad debts can sometimes be reported as short-term capital losses. However, this really depends on your specific situation and whether you're using cash or accrual accounting.

3 Good point! They definitely should have issued a 1099-NEC for payments over $600. If they didn't, you should still report the income you actually received, but that missing 1099 might be another sign the company wasn't following proper business practices.