Does this also apply to Roth 401k contributions? I contribute to a Roth and I'm confused if it works differently since those are after-tax contributions.

Great question! Roth 401k contributions work differently. Since Roth contributions are made with after-tax dollars, they DO NOT reduce your Box 1 wages on your W-2. With Roth 401k, you'll notice that your Box 1, Box 3, and Box 5 amounts will be more similar (though there may still be differences due to other pre-tax deductions like health insurance). This is because Roth contributions don't give you an up-front tax break - instead, the benefit comes later when you withdraw the money tax-free in retirement.

You can still claim the Retirement Savings Contribution Credit (Saver's Credit) even though your 401k contributions already reduced your taxable income! These are two separate tax benefits. The pre-tax 401k contribution reduces your taxable income, while the Saver's Credit is an additional credit for lower to moderate income taxpayers who contribute to retirement accounts. You definitely should claim the Saver's Credit if you qualify based on your adjusted gross income - it's an additional benefit on top of the tax deferral you already received.

Thank you so much for these specific suggestions! I never thought to check my email archives but I just did a quick search and found at least 15 receipts for art supplies I'd completely forgotten about. Found records of my Procreate purchase, Clip Studio subscription, and even some drawing tablet accessories. Do you think PayPal's reports will show both my income AND my business expenses if I purchased them through PayPal? Or do I need to sort that out separately?

PayPal reports will show all your transactions, but they won't distinguish between personal and business expenses automatically. You'll need to go through and identify which purchases were for your illustration work. Your PayPal 1099 only reports your income received through PayPal, not your expenses. I'd recommend downloading your PayPal transaction history for the full year and sorting it in a spreadsheet. Look for payments to art supply stores, software companies, and other business-related vendors. Flag those as potential deductions, then verify with any email receipts you can find to confirm the purpose of each purchase.

Exactly this! I wasn't just hit with the taxes I owed but also a 25% failure-to-file penalty PLUS interest that kept growing. The IRS is actually pretty reasonable if you file on time and work with them, even if you can't pay right away. It's when you don't file that they get aggressive.

Oh wait, I do still have a savings account back in Canada with about $15,000 CAD in it. I had no idea I needed to report that! Is that going to cause problems? And does that mean I can't file early?

You definitely need to file an FBAR for that account since it exceeds $10,000. It's not part of your tax return though - it's filed separately through FinCEN (Financial Crimes Enforcement Network). Don't panic! It's just an information reporting requirement, not a tax. You can still file your regular tax return early, and the FBAR is due April 15th with an automatic extension to October 15th. Make sure you also report any interest earned on that Canadian account on your US tax return (Schedule B). The fact that you're asking about this now is good - it's much better to handle it correctly from the start rather than having to fix it later!

I used IRS Free File last year as a new resident (moved from Australia). As long as you meet the income requirements (under $73,000 for most programs), your residency status doesn't affect eligibility. They'll ask questions about when you became a resident, but the free software handles it just fine!

Isn't that only if you had no tax liability last year AND expect none this year? I think there are specific requirements for claiming exempt.

I actually live alone and don't have any shared accounts with family members. I've never even had a family phone plan - always just had my own individual account. That's what makes this so confusing. There's literally no legitimate reason I should be seeing this charge.

In that case, it definitely sounds like fraud. One other possibility - did you recently buy anything online where you paid through PayPal or another payment service? Sometimes the merchant will process the main payment through the service but charge taxes separately directly to the card.

This is exactly what happened to my sister. Small weird tax charge, then boom - two weeks later her card was maxed out with purchases from electronics stores across the country. Definitely get a new card number ASAP.

Thank you both for the warnings. I just got off the phone with my credit card company and they're sending me a new card with a different number. They're also refunding the charge after I explained the situation. Going to check my credit reports right now.