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Another option is adjusting your W-2 withholding at your main job. I'm a teacher with a tutoring side hustle, and I just have extra taken out of my regular paychecks to cover what I'll owe for the tutoring income. Saves me the headache of keeping track of quarterly payments.
Does your employer know you do this? I'm worried mine would think I'm violating some non-compete if I tell them I need extra withholding for my side business.
Your employer doesn't need to know why you're adjusting your withholding. When you fill out a new W-4, you can either claim fewer allowances or simply specify an additional dollar amount to withhold from each paycheck. There's no requirement to explain why you want more taxes withheld. Many people adjust their withholding for various reasons - maybe they have investment income, rental property, or just want a bigger refund. The payroll department processes the change without needing an explanation.
quick tip - i messed up and didnt pay quarterly last year and got hit with a $89 penalty. not the end of the world but now i just use the IRS tax withholding estimator on their website which tells you how to adjust your w4 at your main job to cover everything. free and easy.
Where do you find the estimator? I've been all over the IRS site and can't find anything helpful.
Have you checked your pay stubs during this time? Many times small companies do this because they're having cash flow issues and essentially "borrowing" from the withholding they should be sending to the government. It's illegal but happens more often than people realize. Make sure you're not only getting proper withholding going forward but also that they're actually SENDING that money to the IRS. You could find yourself in a situation where your W-2 shows withholding but the IRS never received it.
I haven't been getting pay stubs! That's part of the problem - they just direct deposit the money and when I've asked for stubs they say "we'll email them" but never do. Is that even legal? How do I know if they're actually sending the money to the IRS if I don't get pay stubs?
That's concerning. Employers are legally required to provide either electronic or paper pay statements in most states. If they're not providing pay stubs, that's another red flag pointing to potential financial issues at the company. You can check if they're remitting your taxes by creating an account on the IRS website and viewing your wage and income transcript. It won't show real-time data, but you'll eventually be able to see if they're reporting your withholding properly. This is definitely a situation to stay on top of because if they're having financial troubles, tax withholding is often one of the first things struggling businesses stop remitting properly.
this happened to me in 2024!! i had to pay almsot $5000 in taxes because my employer did this sneaky crap. what i did was calculate my own withholding using the irs calculator on their website (just search irs withholding calculator) and then i took that amount and divided by number of paychecks left in the year. i just put that exact amount on the W-4 form step 4c for extra withholding and made my boss sign a paper saying he received it. problem solved!
The IRS withholding calculator is definitely helpful but I found it confusing at first. Did you end up withholding enough to cover what you would owe? I tried using it but wasn't sure if I did it right.
Just a heads up - make sure your space truly qualifies as "exclusively used" for business before claiming the home office deduction. I got audited last year because I claimed my guest bedroom as 100% business use, but I occasionally had family stay over. The IRS was not happy about that! If you're storing inventory in a space but also using it for personal purposes, you might not qualify. The space needs to be used ONLY for business.
Does that mean I'm in trouble if I sometimes move some of my inventory boxes around when I need to vacuum or clean? The space is definitely dedicated to my business but occasionally I need to shift things for maintenance.
No, you're not in trouble for basic maintenance activities like cleaning. That's considered a normal part of maintaining your business space. What the IRS looks for is whether the space serves a dual purpose. For example, if you're storing inventory in your bedroom where you also sleep, or using your living room couch for both business and personal activities, those spaces wouldn't qualify. But if you have boxes of inventory in a dedicated area and just move them temporarily to clean, that's perfectly fine.
Has anyone used TurboTax for calculating the home office deduction? Does it explain both methods and help you choose the better one?
I used TurboTax last year and it walks you through both methods and shows you which one gives you the bigger deduction. It asks for your total home square footage, the business-use square footage, and your expenses. Pretty straightforward. But honestly, I still got confused with some of the questions about "exclusive use" and partial room usage. Had to google a bunch of stuff that wasn't clear in the software.
Here's a simple example to understand blended vs marginal rates: Let's say for married filing jointly (simplified version): - First $20k taxed at 10% = $2k tax - Next $60k taxed at 12% = $7.2k tax - Next $90k taxed at 22% = $19.8k tax - Next $100k taxed at 24% = $24k tax If you make $250k taxable income, your total tax would be $53k (adding all those up), making your blended rate 21.2% ($53k/$250k). But your marginal rate (top bracket) would be 24% because that's the rate at which your last dollar was taxed.
Thanks this makes so much more sense with actual numbers! So is there any easy way to calculate what specific dollars are being taxed at what rate? Like if I get a $5000 bonus, is there a quick way to know how much of that I'll actually take home?
For a $5,000 bonus, it would be taxed at your marginal rate (your highest bracket) because it's additional income on top of what you already make. So if your highest bracket is 24%, about $1,200 would go to federal income tax. However, bonuses are often initially withheld at a flat 22% for federal tax (this is just withholding, not the actual final tax rate). Your actual tax obligation will be calculated when you file based on your total income and where it falls across the brackets. If your true marginal rate is higher than 22%, you might owe a bit more at tax time.
I created a small spreadsheet to calculate my blended rate manually and found Turbotax was spot on. Here's what I did: 1. Find the income thresholds for each tax bracket for your filing status 2. Calculate the tax for each bracket up to your income 3. Add them all up 4. Divide by your taxable income My taxable income was $143,750 and total tax was $25,156, giving me a blended rate of 17.5%, despite being in the 24% bracket. Would be happy to share the spreadsheet if anyone wants it.
Could you share that spreadsheet please? I'm terrible at math and this whole conversation has me confused. I make $110k and my wife makes $72k and I have no idea what our blended rate should be.
I'll simplify it for you - with a combined income around $182k (minus standard deduction), you're likely in the 24% bracket, but your blended rate would be approximately 18-19%. The crucial thing to remember is that only the portion of your income that exceeds each threshold gets taxed at the higher rate. For 2025 married filing jointly, the first $22,000 (standard deduction) isn't taxed at all, then 10% applies to the first $23,200 of taxable income, 12% to the portion between $23,200 and $94,300, 22% from there to $190,750, and 24% on anything above that but below $364,200.
Alberto Souchard
This happened to me because my ex-spouse filed using my SSN after our divorce! Check your credit report ASAP to see if there's any suspicious activity. Also, check if someone claimed you as a dependent on their taxes - that can sometimes trigger the IP PIN requirement if the IRS detects a mismatch.
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Katherine Shultz
β’How would you know if someone claimed you as a dependent? Is there a way to check that before filing?
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Marcus Marsh
Has anyone had success getting the IP PIN issue resolved by visiting an IRS Taxpayer Assistance Center in person? I made an appointment next week because I'm tired of the phone runaround, but wondering if it's worth the time off work.
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Hailey O'Leary
β’I did this last year and it worked great! Bring a government ID, your social security card, and copies of your last two years of tax returns if you have them. They were able to verify my identity on the spot and give me my IP PIN immediately. Took about 45 minutes total with waiting time. MUCH better than the phone nightmare.
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