Just a heads up - the 1099-K threshold changed again. For 2024 taxes it's $5,000 so more people are getting them than ever. This is why so many are confused about how to report them!

One thing that helped me when I was confused about this - make sure you're looking at your Uber driver dashboard for the year-end tax summary. It breaks down exactly what you earned vs. what passengers paid (which is what shows on the 1099-K). The difference is huge - my 1099-K showed like $12,000 but I actually only earned about $8,500 after Uber's fees. You'll want to report the full 1099-K amount as income in the Self-Employment section, then deduct all of Uber's commissions and fees as business expenses. Also don't forget about tolls if you paid any - those are deductible too. FreeTaxUSA makes it pretty easy once you know to look under Self-Employment Income instead of trying to find a specific 1099-K form entry.

For business owners specifically, I'd recommend FreeTaxUSA Self-Employed ($19.99) or TaxAct Professional ($89.99). Both handle Schedule C beautifully and if you pay their fees upfront, your refund comes directly from the IRS. I switched from TurboTax Business last year and saved over $100 while avoiding SBTPG completely. The key insight everyone's sharing here is spot-on - it's not the tax software that's the problem, it's choosing "pay with refund" that forces you through these third-party banks. Pay upfront and you'll get your money 7-10 days faster without anyone taking a cut!

As someone who's been dealing with tax prep for over a decade, I can confirm everything everyone's saying here is accurate. The real game-changer for me was learning that EVERY major tax service - TurboTax, H&R Block, TaxAct, FreeTaxUSA - will route through a third-party bank (SBTPG, Republic Bank, etc.) if you choose "pay with refund." But here's what saved me last year: I started treating tax prep fees like any other business expense and just pay upfront with my business credit card. Not only do I avoid the delays and fees from these middleman banks, but I also earn cashback/points on the transaction AND get my refund 7-10 days faster. For small business owners especially, that faster cash flow can be crucial. The IRS actually processes e-filed returns pretty quickly - it's these third-party processors that create the bottlenecks we all hate.

As someone who went through this exact transition from W-2 to 1099 last year, I'd recommend opening a separate savings account specifically for taxes and treating it like a bill you pay yourself every week. Set up an automatic transfer for whatever percentage you decide on (the 30-35% range mentioned above is solid advice). This way you're not tempted to spend that money, and when quarterly payment time comes around, you'll have the funds ready. Also, consider getting a simple bookkeeping app or even just a spreadsheet to track your income and expenses throughout the year. It makes tax time so much easier when everything is already organized. I use a basic Google Sheet that tracks my weekly income, tax savings amount, and any business expenses like mileage. The anxiety is totally normal - we're all used to having taxes handled automatically! But once you get into a routine with the savings and quarterly payments, it becomes second nature.

Great question about the separate savings account! I personally use a high-yield savings account with Marcus by Goldman Sachs that's currently earning around 4.5% APY. Since you're setting aside potentially $1000+ per week, that interest can actually add up to a nice chunk of change over the quarters. Other good options are Ally Bank or Capital One 360 - both offer competitive rates and no minimum balance requirements. The key is finding something that makes it easy to transfer money automatically but not so easy that you're tempted to dip into it for other expenses. I'd avoid putting it in a CD or anything with penalties for early withdrawal since you'll need access to the funds for your quarterly payments. A regular high-yield savings account gives you the best combination of earning potential and liquidity for tax savings. Just make sure whatever account you choose doesn't have monthly fees that could eat into your earnings. And definitely keep this account completely separate from your regular checking/savings - treat it like it's not even your money, because technically it belongs to the IRS!

I appreciate everyone sharing their experiences and expertise here. As someone new to business taxation, this thread has been incredibly educational. What strikes me most is how the seemingly "clever" tax strategies often end up being more expensive and risky than just paying taxes legitimately. Between audit risks, penalties, legal fees, and the stress of dealing with IRS scrutiny, it seems like the legitimate approaches mentioned here (retirement contributions, proper business deductions, Section 199A deduction) are not only safer but probably more effective in the long run. I'm curious - for those who have successfully implemented legitimate tax strategies, what would you say is the most important first step for a new business owner? Should I focus on finding a good CPA first, or start by learning the basics myself through resources like the ones mentioned in this thread? The horror stories about audits and penalties are definitely making me want to be extra cautious from the start.

This is exactly the kind of comprehensive discussion that new business owners need to see. The progression from "creative" tax schemes to legitimate strategies really illustrates why proper planning is so important. I've been running my small consulting business for about two years now, and I made some of the classic mistakes early on - not tracking expenses properly, missing legitimate deductions, and almost falling for some questionable advice I found online. What saved me was finding a CPA who specialized in service businesses and taking the time to understand the basics myself. One thing I'd add to the excellent advice already given: start keeping meticulous records from day one. I use QuickBooks now, but even a simple spreadsheet tracking income, expenses, and mileage makes tax time so much easier and ensures you don't miss legitimate deductions. The Section 199A qualified business income deduction alone saved me thousands last year - that's a legitimate 20% deduction on business income that many small business owners don't even know exists. Combined with maximizing my SEP-IRA contributions, I was able to significantly reduce my tax burden without any of the risks associated with aggressive schemes. To the original poster - the fact that you're asking these questions and doing research shows you're on the right track. Just channel that planning energy into legitimate strategies and you'll be much better off in the long run.

Has anyone successfully negotiated down the penalties with the IRS? I'm in a similar situation with RSUs but for 2023, and I'm worried about the penalties more than the actual tax owed.

I'm dealing with a very similar situation right now! Got acquired in early 2023 and had RSUs vesting quarterly through the end of that year. Like you, I saw the RSU income on my W-2 and assumed everything was handled automatically. Just got my CP2000 notice last week claiming I owe $22k. After reading through this thread and doing some research, I realized I completely missed reporting the "sell to cover" transactions on Schedule D. The frustrating part is that I actually overpaid taxes because I didn't claim the correct cost basis for the shares that were sold! The IRS is treating the sales as if I had zero basis, but since the RSU value was already taxed as income, my basis should equal the fair market value at vesting. Going to gather all my documents from Schwab (my company's plan administrator) and prepare a response showing the correct calculation. Thanks everyone for the helpful advice - makes me feel less panicked knowing this is a common mistake!