This has been an incredibly helpful thread! As someone who's been on the fence about hiring my 12-year-old in my consulting business, seeing all these real experiences and practical tips has given me the confidence to move forward. A couple of things I'd add based on my research: Make sure you understand your state's specific child labor laws in addition to federal requirements. Some states have additional restrictions on hours or types of work for minors, even in family businesses. Also, I've found it helpful to think about this as a legitimate business decision, not just a tax strategy. Ask yourself: "Would I hire a non-family member to do this work?" If the answer is yes and the work genuinely benefits your business, you're probably on solid ground. One practical tip I haven't seen mentioned: Consider having your child submit a simple "timesheet" or work log at the end of each pay period, just like any other employee would. This creates another layer of documentation and helps them understand professional work habits. For those worried about IRS scrutiny, remember that this is a completely legal strategy when done properly. The key is treating it like the legitimate business arrangement it should be, not trying to game the system.

As a CPA who works with family businesses, I want to emphasize the importance of getting your business structure clarified first. Since you mentioned you have an LLC in California, you need to determine how your LLC is taxed - as a sole proprietorship (default for single-member), partnership (if multi-member), S-Corp, or C-Corp election. This matters because the payroll tax treatment is different for each structure. If your LLC is taxed as a sole proprietorship or partnership, you're generally exempt from FICA taxes when hiring your own children under 18. However, if you've elected S-Corp or C-Corp taxation, you'll need to pay FICA taxes on their wages. Also, California has specific requirements for employing minors, even in family businesses. You'll need to obtain a permit to employ minors from the California Division of Labor Standards Enforcement, and there are restrictions on hours and types of work for children under 12. Make sure you understand these state-specific requirements in addition to federal tax considerations. The strategy can absolutely work, but getting the structure right from the beginning will save you headaches later. Consider consulting with a local CPA who understands both the tax implications and California labor law requirements.

I'm a tax professional and see this situation come up frequently during mortgage season! Just wanted to add some insider perspective that might help. Yes, the IRS absolutely still provides stamping services at Taxpayer Assistance Centers, but as others have mentioned, it's appointment-only now. However, before you go that route, definitely explore the alternatives others have suggested - many lenders have become much more flexible about what they'll accept as proof of filing. One thing I haven't seen mentioned yet is that if you're working with a tax preparer or CPA, they can often provide a "client acknowledgment letter" that shows when you submitted your documents to them for filing. This isn't the same as an IRS stamp, but I've seen mortgage companies accept it as interim proof while waiting for official processing. Also, if you do need to mail your return via certified mail, make absolutely sure you're using the correct IRS processing center address for your state - this is crucial and using the wrong address can cause major delays. The IRS website has a "Where to File" lookup tool that's really helpful for this. Three weeks is actually a pretty comfortable timeline for this kind of issue - I've helped clients resolve similar situations in much less time. The key is starting with that conversation with your loan officer about alternatives, then having a backup plan ready. Don't let the stress overwhelm you - this is totally solvable!

This thread has been incredibly helpful - thank you to everyone who's shared their experiences! As someone who's never dealt with anything like this before, I was completely panicking when I first posted this question. I'm definitely going to start by calling my loan officer first thing tomorrow morning to ask about alternatives before pursuing the IRS appointment route. The certified mail option that so many people have mentioned sounds like it could be a much simpler solution, and I'm hopeful my lender will accept it. It's amazing how many different alternatives exist that I never would have known about without this community's input. Sometimes when you're stressed, you get tunnel vision and think there's only one way to solve a problem. I'm feeling much more confident now knowing that multiple people have successfully navigated this exact situation, many with even tighter deadlines than mine. The practical tips about timing, required documents, and backup plans are invaluable. I'll definitely update this thread once I get through the process in case it helps someone else in the future. This community is truly amazing for situations like this where you need real-world advice from people who've actually been there!

Another thing to consider - if any single person donated more than $17,000 to you in 2023, THEY might need to file a gift tax return (Form 709). This doesn't affect you as the recipient though, and doesn't mean the gift becomes taxable to you. It's just a reporting requirement for large gifts from the donor's side.

I'm so sorry for what you and your family are going through. Having dealt with similar fundraising during my grandmother's final months, I completely understand the stress of wondering about tax implications on top of everything else. The good news is that what you received are indeed gifts, not taxable income. Since you're well under the $20,000 and 200 transaction thresholds for 1099-K reporting, the platforms won't be sending you any tax forms. You don't need to report these donations as income on your tax return. However, I'd strongly recommend keeping detailed records of all donations received and how the funds were used - bank statements, screenshots of the fundraising pages, receipts for medical expenses, etc. This documentation will be invaluable if you ever need to explain these deposits to the IRS. The fact that your friend initially set up the GoFundMe shouldn't be an issue as long as it was clearly for personal medical expenses and the funds came directly to you. Just make sure it wasn't accidentally set up as a charitable organization fundraiser. You're smart to consult with your family's CPA before filing season. They'll be able to review your specific situation and provide peace of mind. Take care of yourself during this difficult time.

This thread has been incredibly educational - thank you everyone for sharing your experiences and knowledge! As someone who just started doing user testing and survey work this year (made about $2,800 so far), I was completely confused about how to handle this tax-wise. The point about hobby expense deductions being eliminated really clarifies things. I was initially leaning toward hobby income because of the flexible schedule, but it sounds like self-employment is actually the better choice financially since I can deduct my expenses. I've been using a corner of my living room with a dedicated desk setup for video interviews, plus I bought a ring light and better microphone specifically for this work. Based on the advice here, it sounds like I can deduct a portion of these costs along with internet and phone expenses. One question - for those who've been doing this longer, do you recommend keeping a detailed log of hours worked, or is tracking payments received sufficient for tax purposes? I've been pretty casual about record-keeping so far but want to make sure I'm covering my bases if I get audited. Also planning to start making quarterly estimated payments now that I understand the $1,000 threshold. Better to be proactive than deal with penalties later!

Great discussion everyone! As a tax professional, I want to emphasize a few key points that have been touched on but are worth reinforcing: **The $400 threshold is crucial** - Once your net self-employment earnings exceed $400, you're required to file Schedule SE and pay self-employment tax regardless of whether you call it a hobby or business. At $4,100, you're well over this threshold. **Documentation is your friend** - Keep records of all payments received, even if they come through Venmo or other payment apps. These platforms will likely report your earnings to the IRS anyway, so you want to make sure your records match what they report. **The "exclusive use" test for home office** can be tricky - If you're doing interviews from your bedroom or living room that you also use for personal activities, you might not qualify for the traditional home office deduction. However, the simplified method ($5/sq ft) is more forgiving and might still work. **Consider opening a separate business checking account** - Even though you're receiving payments through Venmo, having a dedicated account for your testing income and business expenses makes record-keeping much cleaner and looks more professional if you're ever audited. **Don't forget about state taxes** - Everything we've discussed applies to federal taxes, but don't forget to check your state's requirements. Some states have different rules for self-employment income and business deductions. The consensus here is correct - treat this as self-employment income and take advantage of the business expense deductions to minimize your tax burden.

This is a really comprehensive discussion with excellent points from everyone! I'm dealing with a similar situation and wanted to add one more consideration that might be relevant. If you do end up filing Form 1065, make sure you understand the timing requirements. Partnership returns are due March 15th (with possible extension to September 15th), which is earlier than individual returns. Missing the deadline can result in penalties that multiply by the number of partners, so even though it's just you and your spouse, late filing penalties can add up quickly. Also, regarding the depreciation question that started this thread - if you go the Form 1065 route, you might want to consider having the LLC pay you and your spouse a guaranteed payment for the use of the property. This creates a deductible expense for the LLC and taxable income for you personally, where you can then claim the depreciation on Schedule E. Your tax professional can help structure this properly. One last thought - given all the complexity discussed here, it might be worth revisiting whether the LLC structure is still the best fit for your situation. Sometimes the tax complications outweigh the liability benefits, especially for a single rental property. You could potentially get similar liability protection through proper insurance coverage without the partnership tax filing requirements.

Great question about LLC vs umbrella insurance! I actually went through this exact analysis last year with my insurance agent and attorney. For a single rental property, a good umbrella policy (we went with $2M coverage) costs about $300/year and covers personal liability from the rental activity. Compare that to LLC annual fees, separate tax filings, and the complexity we've all been discussing here. The key difference is that an LLC provides "entity-level" protection - if there's a major lawsuit, they can go after the LLC's assets (the rental income, bank accounts) but generally can't "pierce the veil" to get your personal assets. With umbrella insurance, you're covered for liability up to the policy limits, but the property itself and rental income aren't in a separate legal entity. Our attorney's take was that for one property with good tenants and proper maintenance, umbrella insurance often provides adequate protection without the tax headaches. But if you're planning to acquire multiple properties or have higher-risk situations (like short-term rentals), the LLC structure becomes more valuable despite the complexity. We ended up keeping our LLC because we're planning to buy another rental next year, but honestly, if it was just going to be the one property, I probably would have dissolved it and gone the insurance route after experiencing all these tax complications firsthand.