Here I think going for the homogeneous/particular solution method is straightforward since the particular solution $y=\frac 14$ is really trivial.
So for homegeneous equation you have $\displaystyle \frac {y'}y=\frac{-4t}{1+t^2}$ which gives $\displaystyle \ln|y|=A-2\ln(1+t^2)$.
So the general solution is $\displaystyle y=\underbrace{\frac B{(1+t^2)^2}}_\text{homogeneous sol}+\underbrace{\frac 14}_\text{particular sol}$
The (quite silly) initial condition requires $y(1)=\frac B4+\frac 14=\frac 14$ so $B=0$ and $y=\frac 14$ is the final solution.
Note that with your method (which is equally good) you arrive at:
$\ln|1-4y|=-2\ln(1+t^2)+C\iff 1-4y=\frac{D}{(1+t^2)^2}$ and the initial condition also gives $D=0$ and finally $y=\frac 14$.
In your work you added $C$ it disappeared and reappeared by magic as an additive constant later. But in fact you should take the exponential of each side and this lead to a multiplicative constant $D=\pm e^C$, with $\pm$ due to the absolute value on LHS.
Also since $y=0$ is always a solution of an homogeneous equation, we generally go for an arbitrary multiplicative constant $D$ in place of $\pm e^C\cup \{0\}$.