Interview Notes • Julia is a data entry clerk, age 26, and single. • Julia has investment income and a consolidated broker’s statement. • Julia is self-employed delivering groceries for Quick Market on the weekends. She received a Form 1099-NEC and a Form 1099-K. She received additional cash payments of $535. • Julia uses the cash method of accounting. She uses business code 492000. • Julia provided a statement from the grocery delivery service indicating the fees paid for the year. These fees are considered ordinary and necessary for the grocery delivery business: o $150 for insulated box rental o $50 for vehicle safety inspection (required by Quick Market) o $600 for Quick Market fees • Julia also kept receipts for the following out-of-pocket expenses: o $80 for business parking o $300 for speeding ticket o $160 for Julia's lunches • Julia’s record keeping application shows she has driven a total of 2,500 miles during and between deliveries. o She placed her only vehicle, an SUV, in service on 3/15/2020. The total mileage on her SUV for tax year 2023 was 12,000 miles. Of that, 9,500 miles were personal and commuting miles. Julia will take the standard business mileage rate. • Julia is paying off her student loan from 2017, when she completed her undergraduate degree. • Julia is working towards her Master of Education degree to start a new career as an Associate Professor. She took a few college courses this year at an accredited college. • Julia took an early distribution of $3,000 from her IRA in April. She used $2,400 of the IRA distribution to pay her educational expenses for the current year. • If Julia has a refund, she would like it deposited into her checking account. 29. How can Julia prevent having a balance due next year? a. She can increase the withholding on her Form W-4. b. She can make estimated tax payments. c. She can use the IRS withholding calculator to estimate her withholding for next year. d. All of the above

d. All of the above Julia can take several steps to prevent having a balance due next year: a. She can increase the withholding on her Form W-4. By doing this, more tax will be taken out of any wages she earns as an employee, which can help cover the tax due on her self-employment income and investment income. b. She can make estimated tax payments. Since Julia is self-employed, she can make quarterly estimated tax payments to cover her tax liability, including income tax and self-employment tax. This can help avoid a large balance due at tax time. c. She can use the IRS withholding calculator to estimate her withholding for next year. The IRS withholding calculator can help her determine the correct amount of tax to withhold from her income to avoid owing tax when she files her return. By taking these actions, Julia can better manage her tax liability throughout the year and avoid surprises when she files her tax return.

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